Private Mortgage Insurance

Presented by Jon Platz
Countrywide Home Loans

PMI (Private Mortgage Insurance) is insurance written by a private company protecting the mortgage lender against loss occasioned by a mortgage default. A lender requires PMI if the borrower’s first loan amount is over 80% LTV (loan to value.) For example if someone purchases a home for $100,000 and borrows over $80,000 on the first loan, he or she will pay PMI. With traditional PMI, the monthly mortgage insurance payment is added to the payment every month.

A Borrower may request the PMI to be cancelled when:
1. The balance of the loan is first scheduled to reach 80% of the original value of the property.
2. The date the principal balance of the loan actually reaches 80% of the original value of the property. This is shown with an appraisal from the lender’s certified appraisal companies.

PMI will automatically terminate when:
1. The principal balance of the loan is first scheduled to reach 78% of the original value of the property. On 30 year FHA loans, the borrower must pay the annual mortgage insurance premiums for at least 5 years even if they obtain 20% equity within the 5 years.

In order to cancel PMI, the borrower must not have made any payments 60 or more days late within the most recent 2 years and no payments 30 or more days late within the most recent 1 year. No tax liens are allowed on the property.

PMI Tax Deductible? Congress passed the Tax Relief and Healthcare Act in 2006 which recommends that PMI be tax deductible. It states that PMI will be treated as fully tax deductible for taxpayers that have adjusted gross incomes of less than $100,000 ($50,000 in the case of a married individual filing a separate return.) The taxable amount is reduced by 10% for every $1000 over $100,000 of adjusted gross income. So, if the adjusted gross income is $110,000 or more, PMI is not tax deductible.

This bill states that the tax deductibility is only applicable to mortgage insurance contracts written after January 1, 2007 and does not apply to PMI accrued or paid after December 31, 2007.

The IRS will interpret this bill and put together a tax code defining and stating the regulations of how the tax deductions may be applied. You may view IRS regulations at www.irs.gov As of today, there are no regulations pertaining to PMI tax deductions described in the website.

It is important to note that until the IRS interprets this bill and forms its regulations; no one will know exactly how the rules and guidelines will work. It is also very important to understand that even if 2007 PMI is tax deductible, it may not be deductible in 2008 or beyond. The borrower must choose his or her loan program based on their overall needs, not just on tax deductibility! And it is always advisable to instruct the borrower to consult his/her tax accountant.

How to avoid PMI

1. TAMI (Tax Advantage Mortgage Insurance)
2. Second Mortgage

Welcome to Canaan Lake

Welcome to The Colony at Canaan Lake. Our lake community offers prestige lake living with all the amenities of city life. Minutes from fine dining, shopping and entertainment in the Village West district located in booming Western Wyandotte County, and across the street from Dub’s Dread Golf Course, The Colony at Canaan Lake offers a luxurious life-style for homeowners.

According to Kim Young and Kristin Hurt with Graham-Welch and Associates, who markets the community, The Colony at Canaan Lake is unique in that it offers an affordable mix of single-family and maintenance provided villas surrounded by the picturesque backdrop of the 60-acre Canaan Lake. Being one of the first communities in western Wyandotte to provide state of the art communications services thru AT&T, we offer the latest in voice, data and video services utilizing fiber optics along with an advanced wireless network for our homeowners.

Our exquisite community with its rolling topography offers mostly walk-out and lake front homesites for single families; and an exquisite ambiance in our maintenance provided villas. The area’s natural terrain has been incorporated into the community, resulting in the preservation of mature oak trees that provide additional scenery and seclusion for homeowners. Homesites for single-family homes are priced from $59,850 to $138,950. Villa homesites are priced from $42,850 to $46,850.

We have five distinguished builders with furnished models available for tour. Cedarwood Homes, Dakota, Inc., Jones & Jones Development, Lochner Homes and Sun Homes offer various home styles including 1½ story, reverse 1½ story, 2 story, ranch, and reverse 1½ villas. Features include stucco, stone or brick exteriors, lavish landscaping and complete sod resulting in a polished, elegant look for the community.

The homes at The Colony at Canaan Lake are priced from $300,000 to more than $1 million, with the villas priced from $300,000.

Community amenities include resident fishing and boating on Canaan Lake. The pool is being renovated this year with a scheduled opening for Spring 2008. A restaurant with meeting rooms is scheduled to open with the next phase of The Colony at Canaan Lake. When complete the residents can enjoy picturesque lake view dining.

Outside builders are welcome on select homesites.