New Law Makes Mortgage Insurance Tax Deductible

Savings for Families

For many first-time homebuyers, the biggest hurdle is saving up for the down payment. In today's high-priced real estate markets, 20 percent can amount to a significant chunk of change. But don't give up. With private mortgage insurance, even if you've got a down payment of just 3 percent or less, you can still buy a home.

This new tax break passed by Congress gives you one more reason to consider purchasing or refinancing your home with private mortgage insurance. Steve Smith, chief executive officer of The PMI Group, Inc. and president of the Mortgage Insurance Companies of America, explains: "Making the cost of mortgage insurance tax deductible helps those who need it most-low-to-moderate-income Americans, primarily first-time homebuyers, who are simply unable to save enough for a 20 percent down payment. This deduction will save homebuyers with insured loans hundreds of dollars."

If you or your family earns $100,000 or less and purchases a home during 2007 with private mortgage insurance, Mortgage Insurance Companies of America, an industry trade group, estimates that this new law may save you $200 to $400 annually. Consult with your own tax advisor concerning the applicability of this new deduction in your particular circumstances under the Internal Revenue Code and the laws of any other taxing jurisdiction.

Families earning up to $109,000 can take advantage of a partial deduction. Your home will probably be the largest investment of your lifetime and every extra bit of money helps.

Good Reasons to Choose

Private Mortgage Insurance

By making private mortgage insurance tax deductible, the new federal law allows more people to become homeowners. "There are lots of loan choices," explained John Taylor, president and chief executive officer of the National Community Reinvestment Coalition. "Mortgage insurance is straightforward. It is a reliable and prudent way for you to get the loan best suited to your needs. And you can cancel it as soon as your equity builds to 20 percent."

What's Right for You?

Over the years, many homebuyers have chosen private mortgage insurance because it's simple, safe and smart. Now it's also tax deductible. As you're considering your home-financing alternatives, consider private mortgage insurance. It may be a product that's right for you.

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