The rules, however, are extremely complex and difficult for borrowers to navigate. Piggybacks as a Substitute For Mortgage Insurance Fortunately, there are a lot of lenders in our system, and some of them have little stake in the traditional mortgage insurance system.
When they discovered a few years ago that they could obtain a competitive advantage by offering combination first and second mortgages instead, they jumped at it. These came to be called "piggybacks". While the second mortgage has a higher rate than the first, the higher rate is paid only on the second mortgage and the interest is deductible. Premiums on traditional mortgage insurance are paid on the entire first mortgage, and were not deductible until , when they were made deductible for that year only.
Within just a few years, piggybacks became established as a major alternative to traditional mortgage insurance. With their traditional business shrinking at an alarming rate, the insurers have been under enormous pressure to develop counter-measures.
Lender-pay insurance is the best of them. Advantages of Lender-Pay Mortgage Insurance Under lender-pay insurance, the lender pays the premium and charges the borrower for it in the rate. This is better than traditional mortgage insurance because lenders have an incentive to pay as little as possible for the insurance, rather than to benefit as much as possible from their referral power.
Since lenders must compete in terms of interest rate, the borrower ultimately will get the benefit of lower insurance premiums. The rate increment lasts as long as the mortgage, but that is also true of the second mortgage part of piggyback arrangements. They each claim one of the two children. They are each required to file for and filed separate tax returns, both using the filing status Married Filing Separately.
They each meet the income tax liability and income qualifications to receive an economic stimulus payment of the maximum amount. Home News Married Filing Separately. However, if the seller is making any concessions toward closing costs, it can be used toward the single-payment mortgage insurance. If you expect to pay down your loan more aggressively than the 30 year schedule, that would be a reason to take monthly PMI. Similarly, if you plan to make improvements to your home, you may be able to get an appraisal after a year or two and demonstrate sufficient equity to your lender to remove PMI.
Ask your loan officer to do a comparison of costs and monthly payments for you both ways. Most lenders have software that can lay out multiple loan scenarios side by side for easy comparison.
In addition, their online filing services have the ability to import your W2 information into your tax return so you can avoid worrying about your forms being delivered via snail mail. The tax deductions are good when you can claim them , but eliminating your PMI altogether is even better.
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