Mortgage Insurance (MI) is generally required for a borrower who has less than 20% equity in her home. MI that is paid by the borrower is referred to as BPMI*, and premiums are typically paid monthly as a part of the housing payment. Additionally, in some circumstances lenders pay for the MI in a single premium at closing, and this is known as LPMI* (Lender Paid Mortgage Insurance).
If home values have increased in your area, you may no longer need mortgage insurance! We can review your current mortgage terms and evaluate home values in your neighborhood to determine if you have enough equity in your property to eliminate your monthly MI payment. Even if your equity position still requires MI, you could potentially save money by refinancing into either a mortgage with LPMI or a mortgage with a reduced monthly MI premium.
Some borrowers can deduct MI payments from their taxes!
Congress has extended legislation that allows borrowers with incomes less than $110,000 to deduct at least a portion of their mortgage insurance (MI) payments.
- If the adjusted gross income (AGI) is less than or equal to $100,000, 100% of MI payments can be deducted.
- The deduction is phased out by 10% for each additional $1,000 of income reported (e.g. if AGI is $101,000, 90% of MI payments can be deducted; if AGI is $105,000, 50% of MI payments can be deducted
- Effective for both refinance and purchase transactions closed after 12/31/2014. Deduction is available for MI premiums paid or accrued between 1/1/2015 and 12/31/2016.