Bank finance articles and tips

With the meltdown finally giving way to prosperity, most people have now began making plans to acquire their own homes. This is idea is entirely commendable, as research has shown, that more than any other sector of the economy, housing sub-sector will help provide the needed jobs to get the economy out of the doldrums.

Mortgage insurance is a mandatory cover that home owners are required to take out on their homes if they own less than 20% of the equity on the home. As a policy mortgage insurance has several pros and cons. One of them is providing avenues for people who hitherto would have found it impossible to own homes to be able to acquire one. However, the premium payable on the insurance generally adds to the cost of the home.

At times, prospective home owners have asked the question is mortgage insurance tax deductible? The answer to this question might not be a simple yes or no answer; however, several factors come into play here. First in the beginning, mortgage insurance was not tax deductible; however as from the year 2007, congress issued a bill that made mortgage insurance tax deductible even up to 100% for households whose income is less than 100,000 and partially deductible for home owners whose income bracket falls between $100,000 and $109,000.

Although this deduction was initially set to expire in 12 months, but Congress has extended it several times. For the fiscal year 2011, for individuals to qualify, their homes must have been purchased between January 1, 2007 and December 31, 2010; in addition to the maximum income requirement.

Deductions has several advantages especially for individuals, first it offers general savings in dollar amount; this means that these funds can be put back into areas that needs it most. Again it provides an avenue to low income earners to purchase their own homes.

However, it is pertinent to point out that these deductions does not include straight out cash purchases of homes, but only on building, buying a home or making substantial improvements on an existing home.

The mortgage insurance deduction act was passed by Congress as the Mortgage Forgiveness Relief Act of 2007. Although for individuals on $100,000 or less, there is a 100% tax deductible, this does not however mean that individuals on the same income will have exactly the same deduction. The deductions are based on the premiums payable on the insurance which will in turn depend on the actually amount borrowed on the mortgage. So when next someone asks: is mortgage insurance tax deductible, you cannot just say yes or no, but the answer will be that it depends on several factors.

Owning your own home is a thing of joy and pride; moreover, it gives focus and provides roots, apart from savings from the rental payments. So if you have not seriously thought about it, now will be the time as deducting mortgage insurance from tax might not last forever.

More information about mortgage insurance and tax deduction, please visit Marcel Miller's site: mortgage calculator with taxes and insurance and mortgage calculator with taxes and pmi

By Marcel Miller
Article Source: http://EzineArticles.com/?expert=Marcel_Miller