Shares Prices

Mortgage Insurance Tax Deductions

If you are a new homeowner or if you have owned your home for years, there are many home mortgage and property tax deductions available for both situations.

Previous Home Purchases

If you own your home you may deduct the interest on your home loan every single year that you own your home. You may also deduct the property taxes for every year you own your home.

Deadlines For Closing on Home Purchases Has Changed

The deadline for closing on the purchase of a new home was extended in July of 2010 from June 30 to September 30, 2010. You must meet the required deadlines to be able to claim the credit. By April 30, 2010 you must have bought or entered into a binding contract on a principal residence. You must close on the home on or before September 30, 2010. You will need to attach Form 5405 to your income tax return form to claim the home mortgage and property tax deduction credit.

If you are a homeowner, then you will most likely see the greatest tax benefits from itemizing your return.

You must itemize on your income tax return in order to take the following tax deductions:

• Mortgage Interest Tax

• Loan Origination Fees

• Points

• Mortgage Insurance Premiums

• Sale of Your Home

• Deductions on a Second Home

In order to claim these deductions you will need to have some documentation available to you such as your mortgage statement, property tax statement, mortgage insurance statement, and any loan closing information that lists the amount of fees paid to purchase your home.

The mortgage interest tax deduction has been a staple deduction for American taxpayers for many, many years. It is unlikely to disappear no matter what other tax changes are imposed. Yet, given the current mortgage crisis, the Wall Street bailout and credit scare, it is very likely that changes, significant changes in how the deduction is taken will occur in the next year or two. What these changes will be is hard to know at this point, but the tax deduction for home mortgage loan interest  is likely to become one of the major political footballs of the next Congress.

TurboTax Online offers step by step instructions on claiming your home mortgage property tax related deductions.

Financial planning is often overlooked in the process of buying a home or refinancing. A typical plan is to get a home loan that extends payments as much as possible, delays the principal reduction, or uses a home like an ATM machine. Today, a financially practical approach is to consider a home as a long term place to live, while planning a time to pay off the mortgage.

When shopping for home loans, most people will take the path of low payment over a plan to eventually be mortgage free. The idea of owning a home free and clear of any mortgage may be a far off concept to many people, but it’s only a matter of time, 15 years, or maybe even less.

A 15 year fixed rate mortgage can provide a realistic goal of being mortgage free, while saving thousands of dollars on interest payments, instead of a 30 year mortgage. For example, on a $200,000 loan, a 15 year mortgage could save as much as $120,000 over the life of the loan when compared to a 30 year mortgage term.

There has been an ongoing debate about the pros and cons of paying off a mortgage. Behind the argument for not paying off your mortgage is the reasoning that you could invest the extra money and earn a higher return, while keeping your money more liquid. That may have been a good reason in the past, but the rate of return on investing is questionable, compared to the fact that every dollar paid to reduce a mortgage balance provides a guaranteed return equal to the interest rate on the mortgage.

Another debating point about keeping a mortgage has been the tax deduction benefit. In order to get an accurate picture of the tax benefit, compare the standard deduction allowed to itemized deductions with mortgage interest. If you paid $20,000 in mortgage interest for the year and received a $2,000 net tax write off, is that a good reason to prolong your mortgage?

What are the benefits of a 15 year mortgage?

• Provides a fixed term strategy to eliminate your monthly mortgage expense.
• Incorporates the retirement of your mortgage into your overall retirement plan.
• Long term investment that guarantees a rate of return by reducing your debt.
• A future with less financial stress and the security of really owning your home.
• Saving a large amount of interest expense on a 15 year term instead of 30 years.

The goal of living without a mortgage payment is attainable. If you can afford a 15 year mortgage, you set a timetable to one day enjoy the benefits owning your home free and clear. You also have the option of shaving a few years off the term by paying a little extra towards the principal balance each month. By the way, 15 year mortgage rates are usually lower than 30 year rates.

New Homes San Diego, Mortgage Quotes