Home homebuyer april07

homebuyer april07

April, 2007 Newsletter

++++++++++++ April 1, 2007 +++++++++++++++++++

Introduction: Some Sales Rise, Some Fall, Prices Fall
Mortgage Rate Update: Most Rates Stable
This Month’s Tip: Tax Changes for PMI (Private Mortgage Insurance)

Introduction: Some Sales Rise, Some Fall, Prices Fall

In a story that we have reported a number of times over the last year, sales of previously owned homes rose in the month of February, but, again, prices fell. According to the National Association of REALTORS, sales rose 3.9% in February, 2007 over the rate in the same period last year. Much of this increase was in the Northeast area of the U.S., where weather was unseasonably warm at the end of 2006. This sales increase was the biggest jump since March, 2004.

At the same time, sale prices once again fell in the month of February, with the national median selling price at $212,800, down 1.3% from the median price of $215,700 in February 2006.

Sales of new one-family houses in February 2007 were at a seasonally  adjusted annual rate of 848,000, according to estimates released jointly  on March 26th by the U.S. Census Bureau and the Department of Housing  and Urban Development. This is 3.9 percent (±17.4%) below the revised   January rate of 882,000 and is 18.3 percent (±12.2%) below the February  2006 estimate of 1,038,000.

The median sales price of new houses sold in February 2007 was $250,000 (this was a decrease of 0.3% from a year ago–ed.); the average sales price  was $331,000. The seasonally adjusted estimate of new houses for sale at  the end of February was 546,000. This represents a supply of 8.1 months  at the current sales rate.

Mortgage Rate Update: Most Rates Stable

Most mortgage rates were reasonably stable for the month of March. 30-year fixed rate mortgages went from an average of 6.18% for the period that ended March 1 to an average of 6.16% for the period that  ended March 29th. This is almost exactly the same average rate,  according to mortgage company Freddie Mac, that 30 year fixed-rate mortgages began the year in January.

15-year fixed-rate averages decreased a bit during the month, dropping from an average of 5.92% at the onset of March to an average of 5.86% at the end.

For current average mortgage rates, see the rates page.

For more information on mortgages, visit the Mortgage Section

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This Month’s Tip: Tax Changes for PMI (Private Mortgage Insurance)

We’ve changed the subject of this month’s tip to give you some hints on possibly saving some money on your taxes. The tip entitled “Ready, Set, Close” will appear in May’s newsletter.

A little-known change in the United States tax code, passed by the Congress at the end of the 2006 session, could mean tax savings for many home buyers in 2007. For those that qualify, Private Mortgage Insurance (PMI) premiums will be tax deductible for 2007 when taxes are filed in 2008. It is important to note here, though, that there are some qualifiers in place that could affect your deductibility, so it is imperative that you consult with your tax professional before assuming that the change will be applicable to your situation.

PMI is an insurance that generally comes into play when a buyer has less than a 20% down payment. This insurance is designed to protect the lender should the buyer default on the loan. The amount of the  mortgage insurance premium will vary due to a number of factors including the loan amount and the amount of down payment accompanying the loan. Since PMI adds a protection to lenders, it frequently allows them to make loans that they otherwise may not be able to make.

Prior to this recent change, there was no tax deductibility avalilable for these premiums. The new law, though, has changed this if you meet the  requirements, which include:

+ $100,000 maximum income for full deductibility
+ Incomes of $100,000 to $109,000 have a phased deductibility
+ Closing must occur in the 2007 calendar year
+ The tax code has been changed allowing this deduction only for the  current year. Congress will need to extend it to have it apply for future years.

Determine If You Qualify

You will most likely want your lender to make comparisions for you to see which is the most advantageous for your situation–Private Mortgage Insurance and a tax deduction or a piggy-back loan where you will secure two loans– one for the 80% first mortgage (so you can avoid PMI) and a second loan for most (or sometimes all) of the 20% down payment.

Next Month’s Tip: Ready, Set, Close

The Home Buying Checklist

Many of our visitors have said that one of the most valuable aspects of the Home Buyer’s Information Center is the Buying Checklist, where they can make sure that all the bases have been touched. You can find the checklist here.

As always, if you have suggestions for improving the  site, or topics you would like to see addressed in  this newsletter (or, if you have used the Home Buyer’s  Information Center to successfully purchase a home),  drop us a quick line here.

A special thanks to all those who have written to let us know  that they have found the Home Buyer’s Information Center a  helpful resource in their buying process.

Have a great month and good luck in all your endeavors!

The Team at the Home Buyer’s Information Center