Part 2: Mortgage Insurance paving the way for First Time Home Buyers in 2008

Part 2:  Mortgage Insurance paving the way for First Time Home Buyers in 2008

The Road

The term “Mortgage Insurance” use to be a menacing word. The stigma of mortgage insurance was non-tax deductible, a waste of money and money that could be spent improving a first time homebuyer’s home.  Now MI is viewed as a vehicle for many first time home buyers to be able to purchase their first home. In this ever changing mortgage market more and more first time home buyers are looking for a way to take the step to becoming a homeowner. With no combo loans available for 100% financing what alternatives do you have?

In Part 1 of Is Mortgage Insurance Tax Deductible I went over the purpose of First time home buyers utilizing mortgage insurance and the benefits of using it with First time home buyer programs. For many borrowers now MI is tax deductible. Congress passed legislation making MI tax deductible for loans closed in 2007 within certain income limitations. This makes mortgage insurance an even better alternative to the traditional combo loans that were so popular the past few years in an accelerating real estate market and the overall best value for many borrowers with low or NO down payment.

Combo loans were the financing engine that that made home ownership so affordable in the past.  Also known as a combination or piggyback loan, a Combo loan product which stacks a higher rate second loan on top of the primary loan giving the borrower two loans and two payments. Combo loans took the place of MI in the past when the mortgage insurance was unable to be used as a tax deduction.

First time home buyers best option now is to work with someone that can explain all of there options and find a solution to meet there needs. Mortgage insurance will allow someone with no down payment be able to realize the dream of home ownership and the realization of real estate wealth.

*Subject to certain income limits. Check with your tax advisor for details.

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