The New Hampshire real estate market is definitely what I would call a buyers market. No doubt about it! So while it's pretty cold up here IT IS a GREAT time to be a BUYER in New Hampshire. Not only is there a good selection of homes available but prices have dropped and in some case more than 10% compared to a year ago. All this makes buying your first home or investing in real estate a great opportunity.
If you're a buyer and you've been saving for that dream home...not sure if you're there yet and confused about Private Mortgage Insurance or if you are a REALTOR and have a hard time really explaining Private Mortgage Insurance to your buyers or better yet why they have to have it.
Read on because I know I have struggled with it...so I asked one of my favorite Mortgage Consultants to blog about PMI and the little gift Congress recently gave many folks this season. It might make a difference to someone on the fence about buying...sometimes there is no better time than the present..to give yourself the gift of home ownership...of course if you need a good REALTOR call me.
So here is Dave Antczak's take on it....and please note that George Souto has added an update to this for me as well..you'll find it at the end of this blog.
PMI……private mortgage insurance. It’s designed to protect the lender against losses should the borrower default on the loan, especially in the first few years.
Until recently, mortgage consultants and borrowers would jump through hoops in an effort to avoid it when the borrower didn’t have 20% to put down on a house.
The typical ways to minimize the cost of PMI were to either use tax advantage mortgage insurance, (also known as TAMI), where the lender would build the cost of the insurance into the rate or roll it into the loan as a lump sum; or they would use a “piggy-back” loan, in which the borrower would have an 80% first mortgage, (thus avoiding the PMI requirement), and then a second mortgage to cover the difference between the down payment and the remaining 20%. Though the second loan has a higher rate, a “piggy-back” is often less expensive than PMI.
These options don’t always work for every borrower, however. Kevin Schneider, president of the PMI firm, Genworth Mortgage Insurance, estimates that in the coming year, 1 million buyers will sign up for mortgages with PMI.
But due to an early Christmas present from Congress, many more folks will now be able to save a little on PMI.
Early on Sunday morning, lawmakers made it possible for many homeowners to receive a tax deduction for their PMI. Homeowners with less than $100,000 in taxable income are eligible, and will average a tax savings of around $300, according to experts.
“It enables folks of low to moderate income, the traditional first-time home-buyers, to get into a low down-payment mortgage,” said Schneider.
But here’s the best part. By taking advantage of the seldom utilized TAMI tactic referenced earlier, in which the PMI cost is rolled into the mortgage, borrowers can save even more. It’s always been the best way to go according to many, including TV financial advisor Suze Orman, because it increases the interest deduction and adds less to the monthly payment. And now with the new tax rule, the entire up-front premium becomes tax deductible the first year.
On a $200,000 mortgage, that translates into a Christmas gift from Congress of over $1,000……not bad. Happy Holidays!
Home Loan Consultant
603-327-0245 - office
david_antczak@cmvhomeloans.com
Update...Thank you George Souto
First the only mortgages and Refi's that we know that they will apply to are those Closing in 2007, we don't know if this deduction will continue after that. The Democrats may decide not to extend it beyond 2007 since they will control the Senate and the House in January. Borrowers with adjusted gross household income of $100,000 or $50,000 each in the case of married individuals filing seperate tax returns.
It is still a great deduction for a lot of people but not everyone will be able to take advantage of it.
We know that you don't care what we know ....until you know that we care!
Jay and Monika McGillicuddy
Prudential Verani Realty
Hampstead NH
603-548-7728
When looking for KNOWLEDGE, SKILLS & EXPERIENCE plus SERVICE at its best. Don’t make a “move” without the help of Jay & Monika your R. E. Professionals. Combined 44 years of R.E. experience 4 U
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Monika ~ that's interesting, I didn't know that. Guess I'd better start reading all these mortgage brokers posts! :)
kk
Monika thanks for sharing I did know about this new tax change.
Thanks Kristal...I didn't know about either till Dave told me. So I begged him to put it in writing for me.
Jennifer...Thanks for reading. Thats what is so great about AR all the sharing and learning going on!
Monika - It is, indeed, a great buyer's market up here, and I really hope many more buyers are beginning to realize it. We're getting more showings on our listings now, and we're starting to see more sale pendings now, too.
Ann
Ann that is great news! We're still pretty slow down here. I do think it will pick up as buyers realize what a golden egg they have.
Moni
Great information - I did not know about the new tax advantage. We're in a full blown buyers market here in Miami as well. It's a great time to buy.
I did read about this earlier yesterday Monika but I forgot to tell you since we had our office Chrsitmas (Holiday) party.
Your Hubbin
Jay
Thanks for reading Ines. Our market is still pretty slow...I think the buyers are just sitting and waiting.
Jay...You knew and didn't tell me...You bad!
Monika, Dave gave you very good information. I would just add a couple of things about the new legislation. First the only mortgages and Refi's that we know that they will apply to are those Closing in 2007, we don't know if this deduction will continue after that. The Democrats may decide not to extend it beyond 2007 since they will control the Senate and the House in January. The income limits for single homeowners or Households filing separately, will be $50,000 each.
It is still a great deduction for a lot of people but not everyone will be able to take advantage of it.
Hi George ,
Thanks so much for the additional information.
Can I add your words to my blog???
Monika, yes you can, but since last night I doubled checked one thing that I stated, and that was in regard to the single person household income.
The initial information that I received on this it was confusing as to whether the $50,000 limit applied just to married couples filling separately or if that included single people. So I called Genworth Mortgage Insurance, who are also one of our PMI companies for a clarification. The $50,000 only applies to married couples filling separately, and not single people, there household limit will still be $100,000. Also I should use the right terminology when referring to "Household Income" it is the "Adjusted Gross Income" so this tax deduction will probably affect more people than I originally thought.
The one thing that we have to be careful with in giving out some of this information is that the IRS has not looked at this yet, and who knows how they will end up interpreting the Bill.
So yes you can add my information if you want, but just correct the $50,000 adjusted gross income, to only apply to the married couple filling separately.
Now have I rambled on enough...LOL???
Hi George...I've added the update in the blog... from you and linked to you. I think it is better in the blog than lost here in the comments.
Thanks ever so much for reading and adding your comments.
Monika, Sorry, but with all my comments something got lost. The last sentence should read:
"Borrowers with adjusted gross household income of $100,000 or $50,000 each in the case of married individuals filing seperate tax returns."
I hope that makes it clearer, and I am honored that you thought of adding that to the Post.
Monika,
It has been a buyers market here as well, but the phones are starting to ring and appointments are being scheduled. Looks like we might have some good movement here in South Carolina at the first of the year. Thanks for your post!
Jim Graham
Jim
Oh boy....I hope it comes up our way!!! It is still pretty slow in Southern N.H.
Monika