Skip to main content

Improving Your Options (Posted December 28, 2015)

Just before the Christmas holiday – in fact, exactly a week before, on December 18, 2015 – the President signed legislation that renews the tax deductibility of mortgage insurance (MI) premiums for qualified borrowers through 2016. 

This new legislation is effective for purchase and refinance transactions closed after December 31, 2014. Mortgage Insurance premiums paid or accrued after December 31, 2014, and through December 31, 2016, may qualify for tax deductibility on borrowers' subsequent federal tax returns as follows:

•  Borrowers with adjusted gross incomes below $100,000 may deduct 100% of their MI premiums
•  For borrowers with adjusted gross incomes from $100,000.01 to $110,000, deductions are phased out at 10% increments for each additional $1,000 of adjusted gross household income

Quite often, of course, many buyers immediately stop listening when they hear the term “mortgage insurance” and start thinking about other things like needing to schedule an appointment with the vet to get their cat dewormed or why bread always lands butter side down when dropped.  They lose their focus, and that could lose the sale.  Get them to focus and remind them that those loan options that have mortgage insurance usually have lower monthly payments, much lower down payment requirements (3%), and cancellable premiums.  As it dawns on them that you’re more than a real estate agent – you’re an expert – deliver this coup de grâce (I believe that’s French for “do you want fries with that”) about the tax deductibility, and they just might name their first child after you (or, at least, their next cat – whom I hope has been dewormed). 

Just a couple of reminders to keep in your back pocket:

•  Under the Homeowners Protection Act of 1998, lenders must terminate MI once the loan is scheduled to reach 78% of the original home value – the insurance policy should be automatically cancelled at that time
•  The CFPB, this month, issued a compliance bulletin reminding lenders of this automatic cancellation requirement – even if the home’s value has dipped below the sales price

•  The cancellation rules DO NOT apply to the low-down-payment FHA loans – borrowers are required to pay insurance as long as they have an FHA loan (if the loan was acquired after June, 2013)

Comments

Post a Comment

Popular posts from this blog

The Naked Truth About Home Buying

It’s highly likely I’ve already written about this, but I’ll try to make it entertaining at least.   There’s a guy who works in ou r office who suffers from kidney stones – and from what he’s described, “suffers” might even be a little too tame a word for it.   As an aside, though, when you ask him how painful the experience is, he gets an odd smile and says, “It’s the most intense pain I’ve ever experienced, but it’s hard to describe.   I’ve heard a lot of people compare it to the pain a woman experiences while giving birth.   To that, I must say, those people are big, fat liars!   I’ve been in the presence of a woman giving birth, twice, and her pain has to be 100 times worse.   They’re passing the equivalent of a Buick.   I’m passing a pumpkin seed.”   He’s always been a colorful fellow. He’s had this wonderful condition for over a decade now, and the stones make their appearance about every 18 months or so.   Up until recently, ...
Post a Comment
Read more

Saving Money is Music to Your Ears (Posted January 9, 2017)

For all the “old” people out there, you’ll instantly know the name Daryl Hall.   For those of you who are still on your original set of adult teeth (perhaps because you got your braces off fairly recently), Daryl Hall is a musician (the blonde half of the duo Hall & Oates – the one who DIDN’T have a mustache that looked like it was straight out of an ’ 80s adult film) with a number of albums (albums a re these big, black 12-inch vinyl “platters” that look like a pregnant CD) that have been certified as gold/platinum and hit songs to his credit, some of which he recorded himself and some he wrote for others.   Going back to 2007, he started a show on the internet called Live from Daryl’s House ; in 2011, he took it to cable where it currently airs.   The concept is relatively simple: he has musicians from all genres and eras come to his house to jam with him and his band.   In between songs, they talk about music and memories, and they usually end up eatin...
Post a Comment
Read more

Showcase Showdown (Posted October 17, 2016)

The game show “The Price is Right” – the show where 95% of what they give away is total garbage (fireproof bathmats in the shape of Ecuador, really?) – is probably each child’s first exercise in trying to guess how much something costs.   Admit it, you sat glued to the TV set either screaming at the screen so the contestant could hear you or you were sending out vibes telepathically – either way, you KNEW you were the BEST price guesser in the world . . .   until the very moment the model would reveal the real price of $732 for a set of salad tongs made of Lucite and cubic zirconia (your bid was $17, and you thought THAT was probably a little high).   But that didn’t stop you because here comes that toaster oven that doubles as a brief case – how could anyone put a price on THAT? A recent study published in the Journal of Housing Research (just let the sheer coolness of that name wash over you for a few moments) concerning pricing was interesting.   The r...
Post a Comment
Read more