Dennis' Mortgage Blog

Question of the week:  Can I deduct my mortgage insurance premiums?

Answer:   I preface this answer with: I am not a tax professional please consult with your own tax preparer regarding any tax deductions.  Okay, disclaimer in place.  According to IRS Publication 936 (2009) mortgage insurance may be deductible for the tax year 2009.  To qualify the mortgage insurance must be “in connection with home acquisition debt” meaning the mortgage used to purchase your home.  Check with your tax preparer if she/he considers a rate and term refinance of your purchase mortgage(s) to qualify as “in connection with home acquisition debt.”  If the mortgage insurance meets that criteria the second criteria is that deduction phases out starting at $100,000 in income for married couples ($50,000 for married filing separate or individual filers), deduction completely phased out after $109,000 in adjusted gross income ($54,000 individual filers).  Is your mortgage insurance deductible?  Maybe, but please check with a certified tax professional before claiming deductions, especially if you are paying mortgage insurance on a mortgage refinance or if your income exceeded $100,000 in 2009.

Thanks to CPA DJ for assistance on the answer to this question.

Have a question for me?  Ask me!

If you or someone you know is planning on taking advantage of the Homebuyers Tax Credit then you better get on it.  April 30^th is fast approaching.

While I appreciate the opportunity for some extra cash for those eligible, I will be happy when the buyers tax credit expires and hope it is not extended.  There has been tremendous fraud across the country that has cost taxpayers millions of dollars.  The tax credit is set up to benefit a small percentage of Americans who happen to be at the right place at the right time.  When the tax credit was first put in place I was so-so on it because recipients have to pay back their credits.  When the credit was extended into 2009 the repayment clause was taken out of the credit. In our experience the credit has not been the deciding factor for whether anyone has bought a home, but rather it has been a factor in their timing.  It is my opinion most recipients of the tax credit would become homebuyers anyway.  I am very aware that the National Association of Realtors and a great many of its members do not like this opinion and would like to see the tax credit extended yet again, joining members of my industry and others in the real estate professions, but I stand by it.  Let’s let the markets settle out with less government interference and tax payer funds being used.     Off my soapbox.

Technical Alert!  Moving average: the average price of a product for a stated period of time, i.e. 10 day, 50 day, 100 day moving average of DCS Corp stock would be the average of the closing price of the stock for each of the preceding 10, 50 and 100 days.   Moving averages can provide resistance to prices going higher above the average price line, or support to prevent prices from moving lower.  This past week Mortgage Backed Securities needed a helmet as they slammed against the 100 day moving average and could not break through on Tuesday, Wednesday and Thursday.  This morning MBS are strapping on the gear and making another run. 

And this means….Despite plenty of negative economic news this week that would add momentum and push to MBS as they hit the resistance barrier the barrier has held firm.  This is a pretty good signal that prices need something even more extraordinary to break through.  Remember, high prices for bonds mean low rates.  What it means is we are probably at the floor on rates for this cycle.

The news this week:  Tuesday we had consumer confidence for January over 10 points below December.  The Department of Labor announced almost 1800 mass layoff actions across the country affecting over 180,000 workers in January.  Fed Chairman Ben Bernanke addressed Congress and said any recovery is muted and rates will need to stay extremely low for an “extended period.”  Wednesday the Commerce Department released new home sales figures for January and at just over 300,000 homes it was the lowest level in fifty years.  Finally on Thursday initial unemployment claims came out and almost hit half a million Americans filing claims last week (496,000).

The economic data pulled MBS up from the big drop they took last week, most as reaction to the Fed raising the discount rate.  The big move above the resistance level may happen today, if so we’ll see how long it lasts.  In recent weeks the longest the market has sustained prices above the technical resistance levels has been about two days.

This week in rates dropped on the strength of yesterday’s strong market.

Rates for Friday February 19, 2010:

FIXED RATE MORTGAGES AT COST OF 1 POINT*

30 year conventional 4.75%                              Down 0.125%

30 year conforming-jumbo 5.00%                     Down 0.125%

30 year FHA    4.75%                                      No Change

30 year FHA jumbo 4.875%                            Down 0.375%

Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, and period rate is locked (i.e 45 days instead of 30 days).

Please note that rates quoted are based on average of several lenders for a purchase transaction with 20% down payment and a minimum FICO score of 740; APR is not quoted as it is dependent upon specific loan amounts, lenders and services selected.  Numbers provided are for comparative purposes only.

We end February this weekend, one-sixth, almost seventeen percent, of the year past—how are your resolutions doing? J

I am around most of the weekend if you or your clients need any mortgage questions answered or numbers run.

Have a great weekend, let me know how I can be of service to you,

Dennis