Question:

How does the fact that Congress makes mortgage insurance tax deductible in 2007 affect homeowners?

Answer:

This is great news for homeowners - Congress made mortgage insurance tax deductible in 2007 tax year and throughout 2010. According to the Tax Relief and Health Care Act of 2006, the tax deductions on private and government mortgage insurance were first announced to be available for low to average income taxpayers for loans made in 2007. However, mortgage insurance tax deductibility has been extended through 2010 tax year.

This Congress decision to alleviate the financial burden to millions of homeowners by introducing tax deductions for mortgage insurance premiums is good news particularly for first-time homeowners who often cannot come up with the 20% down payment for a home.

The Congress choice to recognize mortgage insurance as financial charge similar to mortgage interest affects many responsible homeowners-to-be who can't really afford to make a 20% down payment and have to put up with PMI payments. The mortgage insurance tax deduction introduced in 2007 by the Congress targets minority groups; it is estimated that one-third of the taxpayers to benefit from this legislation will be minority homeowners.

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