New Mortgage Insurance Tax Break For 2007 Homebuyers (NAPSA)—There is good news for people looking to buy a home this year: Mortgage insurance is now tax deductible. The new deduction will provide an average savings of $200-$400 for new homebuyers seeking safer forms of low down paymentfinancing than “piggyback” mortgages and other creative loans, where monthly payments can skyrocket when interest rates adjust. For the past few years, low monthly mortgage payments on interest-only and adjustable-rate loans have put previously unaffordable homes within reach for many homebuyers. Now, as shortterm interest rates reset from historical lows, rising monthly pay- ments are creating a growing wave of foreclosures. “Too many people have gambled with the one thing they shouldn’t risk—their homes,” said Kevin Schneider, president of Genworth Financial’s U.S. mortgage insur- ance business. “Insured loans are one of the most affordable and safest ways to buy a home, and this new tax break makes it an even better deal.” Mortgage insurance helps buyers who can’t make a 20 percent down payment become homeowners sooner. While piggyback mortgages do the same by combining two mortgage loans, the second loan usually carries a higher and potentially adjustable interest rate. Mortgage insurance allows buyers to remain secure in the knowledge that their monthly paymentwill not change. According to mortgage expert Holden Lewis at Bankrate.com, the “bottom line for consumersis, don’t get a piggyback loan without taking a serious look at mortgage insurance, because mortgage insurance is likely to be cheaper in the long run, and it might even cost less in the short run.” Mortgage insurance premiums are fully tax deductible for households with an adjusted gross income of $100,000, phasing out as the incomerises to $109,000. To learn more, visit www. smartermi.com. Piggyback vs. Mortgage Insurance — Do the Math 80-15 loan to value piggyback 30-year fixed with Ml Months 1-60 $1,275 After 5 years $1,375 ($100 spike) $1,215 $1,109 Assumptions: $200,000 home with 5% down payment. Piggyback is an adjustable HELOC. First loan (80%) features 6.75% interest rate and second starts at 9.5% and adjusts to 13.5% after 5 years. 30-yearfixed-rate loan with MI with 5% down payment has an interest rate of 5.75%. MI might be cancelable earlier orlater thanfive years.
