Is required on conventional mortgages when you make a down payment less than 20%. PMI is required because loans with lower down payments are considered to be higher risk. A typical PMI payment is around .64% percent of your interest rate. So that averages out to be about $106.00 per month if you have a $200,000 Arizona mortgage on your home.

Tax Deduction for PMI Payments

You can take a tax deduction for PMI you pay through 2011 if your loan was made on or after January 1, 2007. Refinances on or after January 1, 2007 also qualify. The PMI deduction is for refinances of the loan amount and not cash out amounts. If you have a second mortgage, you may be eligible to take the deduction on that mortgage if it was made after January 1, 2007. The property must be your primary residence or property used for your personal use such as a second home or vacation home. There is an adjusted gross income phase out for PMI deductions which start at $54,500 adjusted gross income for married persons filing separate returns and over $109,000 for all other homeowners. PMI deductions are reduced by 10% for each $1,000 of income over the adjusted gross amount. It is recommended that you check with your Arizona mortgage broker and your financial advisor regarding the PMI tax deduction to make sure you are eligible.

Eliminating PMI

Once you have attained 20% equity in your home, the PMI can be eliminated by sending a written request to your lender with a copy of a certified uniform residential appraisal. You should look at your Arizona mortgage loan documents because some lenders require 25% equity. The equity can be from paying your principal balance down, improvements made to your home or from appreciation. Also, lenders are required to automatically cancel PMI for loans that have been paid down to 78% of their value providing the borrower is current on their payments. Delinquent loans will be terminated when they become current, but lenders cannot extend the PMI more than 30 days from the termination or cancellation date. The lender must also return any unearned premiums to the borrower within 45 days of cancellation or automatic termination.

If you have any questions about this or if you have any questions you’d like us to answer on our podcast, you can email your questions to team@azmortgagebrothers.com or give us a call at (602) 535-2171. Be sure to ask us for a free quote on your next mortgage. We’ll personally work with you and help you through the whole process.

•••

Thanks for listening and reading the Mortgage Brothers Show. Let us know if you have any questions you’d like us to answer on this podcast. You can email your questions to Tom@AZMortgageBrothers.com or Eddie@AZMortgageBrothers.com.

Be sure to ask us for a free quote on your next mortgage. We’ll personally work with you and help you through the whole process.

Signature Home Loans LLC does not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only. You should consult your own tax, legal, and accounting advisors before engaging in any transaction. Signature Home Loans NMLS 1007154, NMLS #210917 and 1618695. Equal housing lender.

BACK TO LIST