PMI Tax Deductibility Extended to 2010

Earlier this year, congress passed H.R. 6111, the Tax Relief and Health Care Act of 2006 to allow homeowners who purchased or refinanced a home in 2007 to deduct the private mortgage insurance (PMI) premiums that they pay in their loan payments. PMI is required when a borrower puts less than 20% down on a home or has a loan amount greater than 80% of the home value.

Initially this provision would only apply to homes purchased or refinanced in 2007 and was set to expire on 12/31/2007. Congress passed new legislation that will extend this deduction to loans closed in 2007 through 2010.

Here are some of the requirements

• Households whose adjusted gross income is $100,000 or less can deduct 100% of their MI premiums. (The deduction is reduced by 10% for each additional $1,000 of adjusted gross income, phasing out after $109,000.)
• The deduction applies to "qualified residences," as defined in the Internal Revenue Code. Generally, that includes the borrower's primary residence and a non-rental second home. Investor properties are not eligible.
• Read more....

Borrowers should consult with a professional tax advisor for details about MI tax deductibility.

From the Cashflow Coach

Michigan: Guilt By Association

As a mortgage broker in the Lansing area for 14 years, I've seen the real estate industry go through various cycles along with the mortgage industry. Yes, I understand that the housing market across the country as a whole does not look very positive but we need to be careful to not generalize the negative aspects of this downturn to every state and county.

A prime example of this is here in the Great Lakes State of Michigan. Lately it seems like we're getting more press than Britney & Paris combined. An issue I'm dealing with on a regular basis is trying to convince the banks that I broker through that Mid-Michigan is not in the same boat as the rest of the state. We are not guilty by association.

Michigan's statewide unemployment rate as of Oct. 07 is 7.7% compared to the national average of 4.7%. But when you look at Michigan's unemployment numbers, you'll find that for the same time period, the Detroit Metro area was at 9.2%, Flint was at 8.1%, Grand Rapids was at 5.8% and the Lansing area was at 5.4%. (source: U.S. BLS) This has been a long term trend in this state.

What we have found to be true around the country is that there is a correlation between jobs and home values. Yes, we have experienced a downturn in home values in the Lansing area but not to the degree or severity that other parts of the state and country have. What do we attribute to that?

Business Expansion and Jobs

Lansing has benefitted from a diverse economy consisting of Government (state and local), Manufacturing (GM and its suppliers), Education (MSU, Cooley, LCC and more), Financial Services (Jackson National & Auto Owners) and Health Care (Sparrow and Ingham Hospitals). (Source: Lansing Chamber of Commerce)

More importantly, small businesses that work directly with or benefit indirectly from these industries continue to grow. Did you know that more than 58% of all the Lansing area businesses have less 5 employees?

An example of businesses that are expanding in the Lansing area is the Grand Traverse Pie Company. This company just recently opened a new location in East Lansing and plans on using this location as their franchise training center. For more information about this company click here.

Here's another article on business expansion in the Lansing suburb of Charlotte.

One of the advantages of not having double digit housing growth prior to this credit bubble bursting is that our declines are not as severe as other parts of the country. There are a lot of homes on the market which means there are a lot of great bargains if you're ready to take advantage of it.

If you would like to take advantage of these bargains but don't know how you'll swing it financially or don't know what you would qualify for. Contact me to schedule a Cashflow Optimization Analysis. You may be surprised by what you could do.

You have a choice in how you approach our current economy and housing situation. You can choose to live in fear with a scarcity mind set or you can choose to live with an abundance mentality.

Either way, you can be assured that you are not guilty by association. Lansing is a great place to grow your business.