More on Taxes

It's a race to the finish line, and all the CPAs that I know are digging deep for the last burst of energy to sprint to April 17. Including me, I guess; various circumstances and wedding planning have left me with more tax returns to complete before next Monday than I had envisioned. There is, of course, always the option of extending the filing deadline, but for me that would just be prolonging one race at a time when I need to move on to the next one.

But because my eye is tuned to tax law and related issues, this article in the business section of The AZ Republic caught my eye this morning. It reminded me of an issue that many folks don't realize, or if they do, they don't give it much thought: Private Mortgage Insurance, or PMI. Here is the gist of the article:

The rising value of housing is letting some homeowners dump private mortgage insurance and keep a little extra money in their wallets every month.

Mortgage lenders typically want buyers to put 20 percent down on a house but that has become increasingly difficult as home prices zoomed higher.

The Valley led the country in home-price appreciation last year, with a 48.9 percent increase above 2004 levels, according to the National Association of Realtors.

But that increase also has given some homeowners equity beyond the 20 percent that lenders want, which allows them to drop the mortgage insurance, called PMI, and pocket the money that they would have paid for it. PMI protects lenders from default and helps buyers without a lot of cash for a down payment qualify for a mortgage.

Read the rest of the article for more insight; some of the newer mortgages that combine a traditional mortgage with a credit line may not require PMI, and therefore this would be a meaningless exercise.

Different mortgages have different requirements for cancelling the PMI charges, but it's worth a look if it means keeping an extra $100 or $200 in your bank account every month, and with the increase in property values in Morrison Ranch, it's a good bet that most folks' equity would exceed the requirements.