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Refinance in 2007 and See a Tax Break Next Year

By Gabriel Traverso
NFNS Columnist


When you take out a mortgage for more than 80% of the value of your home you are required to pay private mortgage insurance. This requirement is designed to protect lenders, but now Uncle Sam is providing some relief for borrowers.

Reason To Refinance

Now there's another reason to refinance this year: a tax deduction on private mortgage insurance. Right now there are housing markets all across the country experiencing valuation stabilization -- meaning that prices have been too high and are now settling back down. For example, in Las Vegas the real estate market is predicted to drop in price by as much as 8.9% over the next twelve months. Coupled with the fact that Freddie Mac is predicting mortgage rates to rise to as much as 6.4% for a 30-year fixed-rate mortgage by this time next year, do you really need a better reason to get off the fence about refinancing your mortgage?

Mortgage Refinancing

Whether you've been thinking about it because mortgage rates are rising, your neighborhood home prices seem to be taking a down-turn, or simply because you want a home loan for the extra cash, now is definitely a good time to consider refinancing your home. Well now there's a reason that hits a bit closer to home: money back in your pocket.

A Well Earned Tax Break

This is the first year that homeowners will be able to deduct private mortgage insurance payments and while 2007 is just a test year, there are many clamoring for the break to be made permanent. What does this mean for you? According to the Mortgage Insurance Companies of America this could result "in an average annual tax savings ranging between $300 and $350 for taxpayers taking the deduction." So if you've been wondering whether or not now is the right time to refinance your mortgage and take out a home loan, consider all these factors carefully. And remember, how often is it that the government actually wants to give you some of your hard-earned money back?

Sources
Mortgage Insurance Companies of America
CNNMoney.com



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