By: Dona DeZube
Published: February 15, 2013 on houselogic.com
Finding the right mortgage can be hard which is why it’s important to visit sites like https://www.mortgagesforless.ca/ and find yourself a mortgage that is affordable and fair. However, you can’t always get it right and if you paid a really big upfront mortgage insurance premium at the closing table (we’re talking thousands of dollars), you may be able to recoup some of that cost by deducting your payments on your federal income tax return.
How do you know if you paid upfront mortgage insurance premium? Check the HUD-1 settlement statement you got at closing – the one-page sheet showing what you paid and what the home seller paid when you got your mortgage (be it as a standalone or through a Colorado Springs Mortgage Broker or similar service). If you have:
A Veterans Administration or USDA’s Rural Housing-guaranteed loan, the upfront fee will be labeled “funding fee” or “guarantee fee.”
An FHA loan, it’ll be listed as “upfront fee.”
Private mortgage insurance, an upfront fee is a “single premium,” and it’s likely labeled MIP (mortgage insurance premium).
If you didn’t pay an upfront fee, you likely got a monthly payment policy.
The purpose of any type of mortgage insurance is the same: To protect the lender in case you default on the loan. This is the case whether you went through mortgage broker Red Deer or through another service.
The upside is that it’s a good deal for aspiring home owners. Many people, especially first-time buyers, can’t come up with big down payments. Mortgage insurance encourages lenders to give home loans to those who have the means to pay a mortgage, but lack the hefty down payment. Look here for information about mortgage rates from different mortgage lenders.
Not Everyone Qualifies for the Deduction