5 Rules for Mortgage Insurance Tax Deductions

President Obama has signed a bill that has extended the tax deduction of mortgage insurance through 2011.

Here are the rules to remember in regards to this tax deduction:

1. Your purchase or refinance loan must close before Dec 31st, 2011.

2. Household income must be $100,000 or less to get the full write off of the insurance premium.

3. The amount of the write off is reduced by 10% for every $1000 over $100k, with it phasing out at $109,000. This means if you make over $109k as a household you can not write off mortgage insurance.

4. It applies to your primary home and one other residence that the tax payer uses.

5. All forms of mortgage insurance qualify for this. So if you have a FHA or conventional loan, they qualify. If you have paid upfront mortgage insurance with a VA, FHA or USDA loan you can also use this as a tax deduction. The amount is just divided over a 7 year period.

The above is not intended as tax advice. Seek out a tax professional for advice about mortgage insurance deductions.  If you would like a referral to my accountant, please let me know.

Credit Score Resources

Do you know your FICO credit score?  If you are looking to purchase a home, be sure to look into your credit score well in advance.

 

Today’s market is competitive, with more cash buyers investing in property and multiple-offer transactions. Are you in the 700 range? 600 range?  You will need some time to find out your score and work on improving it if need be. Check out the below sources to help you assess your credit situation.

Four Good Sources of Credit Information

Here are four websites worth visiting, if you want to learn more about your credit reports and scores:

1. www.myfico.com — This site is owned by the company that created the credit-scoring model used by most lenders. The education tab is especially useful.  Take a look at the forum where you can post questions.
2. www.annualcreditreport.com — This website is jointly owned by the three credit-reporting companies (TransUnion, Equifax and Experian). This is where you should go to request your free reports. This is the only site that is regulated by the Federal Trade Commission.
3. www.ftc.gov/freereports — This website is useful to find out why a “free” credit report is offered, but then they try to “charge” you for additional things.  This is a marketing practice in wide use and this website can tell you more about it.
4. www.bankrate.com — This site offers credit tips and it explains the mortgage process. You can compare rates, use a myriad of calculators and check out their “news and advise” tab for pertinent news information each week.

The four sites listed above will help you get started on your home buying adventure.