New Lower FHA Premium

GREAT NEWS

for 1st Time Home Owners

and Investors

FHA has just announced new lower mortgage insurance premiums.   This is the best news for many 1st time home owners and investors that frequently seek low down payment loans.

The change may seem small to some but the simple change from 1.07% to .85% really saves a home buyer good money.

As so elegantly stated in the attached handout, a buyer can save almost $30,000 on a $200,000 mortgage over the life of the loan.  That's not chicken feed(unless your feeding one huge flock of chicken!).

Home buyers take a look at this handout.  Then call your Realtor!!!

New Lower FHA Mortgage Insurance Premium

Mortgage Insurance--Deductible on Taxes?

Another great Tax Tip article courtesy of Al Clark's HomeAction Newsletter that I must pass on.  I never want you not to be in the "know". Please read the entire article.  The last couple of sentences are key!!!! HOMEOWNER TAX TIPS FOR YOUR BEST RETURN: DEDUCTING MORTGAGE INSURANCE

Deducting Mortgage Insurance Second in a four-part series of tax tips for homeowners If you put down less than 20 percent when you bought your home, your lender likely asked you to get mortgage insurance. Those mortgage insurance premiums may be deductible on your federal income taxes if you itemize and you also meet other requirements. The mortgage insurance deduction is there for you to use on your 2013 taxes, but you may not get it next year. It expired at the end of 2013 and won't be available in 2014 unless Congress renews it. How does your tax refund stack up? Are you getting more or less than average taxpayer? For early filers, the average federal refund totaled $3,211, an increase of $190 from 2013. Get advice about the tax credits available for this filing season and answers to your other tax questions from the IRS' Interactive Tax Assistant.  Once you file, you can use Where's My Refund? to track the progress of your refund. Mortgage Insurance Deduction Rules To use the mortgage insurance deduction, you have to clear some hurdles: You can only deduct mortgage insurance premiums for a mortgage you got on or after Jan. 1, 2007. If you refinanced in 2007 or later, you can deduct the mortgage insurance premiums for the portion of your loan equal to your original loan. Look in Box 4 of the Form 1098 your mortgage lender sends you to find out how much you paid for mortgage insurance premiums for 2013. Income Limits Even if your loan meets those qualifications, to take the deduction, you still have to meet income requirements based on your adjusted gross income. Your AGI appears on Form 1040, line 38. In general, the deduction gets reduced if your adjusted gross income is more than $100,000 ($50,000 married filing separately) and you lose it completely when you adjusted gross income goes above $109,000 ($54,500 married filing separately). Use the IRS' itemized deductions work sheet (line 13) to see if your adjusted gross income will limit your mortgage insurance deduction. Deducting Upfront Mortgage Insurance Premiums If you paid a big mortgage insurance premium at settlement, called an upfront fee, your deduction may work differently than the deduction for monthly payments (but you still have to follow all the rules mentioned above). "Mortgage insurance provided by the Department of Veterans Affairs and the Rural Housing Service is commonly known as a funding fee and guarantee fee respectively," the IRS says. "These fees can be deducted fully in 2013 if the mortgage insurance contract was issued in 2013." If you paid in advance for any other mortgage insurance, you have to allocate those fees over the shorter of: The mortgage term (usually 15 or 30 years) 84 months (seven years) If you pay off the loan, your deduction ends -- you cannot deduct the remaining amount. Here's an example the IRS uses to explain the upfront mortgage insurance deduction: Ryan purchased a home in May of 2012 and financed the home with a 15-year mortgage. Ryan also prepaid all of the $9,240 in private mortgage insurance required at the time of closing in May. Since the $9,240 in private mortgage insurance is allocable to periods after 2012, Ryan must allocate the $9,240 over the shorter of the life of the mortgage or 84 months. Ryan's adjusted gross income (AGI) for 2012 is $76,000. Ryan can deduct $880 ($9,240 ? 84 x 8 months) for qualified mortgage insurance premiums in 2012. For 2013, Ryan can deduct $1,320 ($9,240 ? 84 x 12 months) if his AGI is $100,000 or less. In this example, the mortgage insurance premiums are allocated over 84 months, which is shorter than the life of the mortgage of 15 years (180 months).  Tax laws and tax rules are constantly being updated and interpreted. This article contains general information, so please discuss your individual situation with a trusted tax adviser before making tax decisions.

1st Timers...Buy Before FHA rates are up!!

Yes!!!  Another message on BUYING NOW!!!

Personally, I am surprised so many buyers are on the sidelines...and I do mean BUYERS that need to BUY!!

Did you know you may be among 300,000 people that graduated, got divorced, add a family member that are projected to be the "pent up market".   

Economists have been stymied by the lack of recovery in the housing market with the pressures present from those noted above that have had a life change event and the general population growth that has occured since 2007(both immigration and births) coupled with the overall increased aging of the American population.

So if great rates under 5% and bargain priced homes has kept you on the sidelines, perhaps new FHA regulations will inspire you.  In June, FHA mortgages will have a higher monthly MI(mortgage insurance premium) which will result in higher mortgage payments for home owners.

For instance, if you purchase a home resulting in a $200,000, your PMI will go from a present  $92/mth to $142/mth:  $50 increase.  

This $50/month equates to $600/year and $6000 over 10 years

Thus if you purchase a home with an FHA Loan and had the appraisal ordered prior to June 1st, you could either save the money or purchase a home up to $210,000 for a similar payment.

Any questions????

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