Saving You Money For Life

Yes, Congress finally passed a bill that allows homeowners to deduct their mortgage insurance but with so many ifs, ands, and buts attached to it, it’s might be more of a headache than a blessing.

For example, homeowners who make more than $100,000 annually can only claim part of the deduction. Homeowners with a household income that tops $109,000 can’t claim the deduction at all. To make it even more specific, only homeowners who took out their mortgage (and their mortgage insurance) after January 1 of 2006 qualify for the deduction.

And even if you do qualify, don’t get too comfortable with it: it’s good for this year only unless Congress decides to extend it.

The good news? The deduction makes so-called piggyback loans – like home equity loans and lines of credit designed to help homeowners avoid mortgage insurance – much more competitive. These are the 80-20 loans or 80-10-10 loans. They get 80 percent of the home’s value with the first part of the loan and the rest of what they need for a down payment in the second loan – and sometimes third.

With low home loan rates, piggybacks were a lot more economical than mortgage insurance. But with the deduction, it may just balance out.

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