This week I’d like to tackle one well known topic – the housing tax credit – and one lesser known subject matter – the fundamentals of pricing in the Mortgage Insurance world.
Let’s get right into the tax credit.
In today’s world of technology, it would seem as though a quick and easy electronic tax filing would be the most expeditious route in order to get your tax credit funds, but that is not necessarily the case.
Due to fraud concerns and the new tax form 5405 which is required with your submission – the tax credit submission process is going to be long and drawn out. The IRS is estimating that it will take three to four months to receive your refund due to the number of traditionally submitted tax credit returns this year.
In addition to the form 5405, the following supporting documentation must also accompany the form and your returns:
- Your HUD-1 Settlement Statement from the closing table
- A copy of your drivers’ license
- Your proof of residency.
So be patient and get those returns in as soon as possible so you can be ahead of the masses this year – and don’t forget to check with your tax professional to make certain that you’ve done everything correctly the first time.
Next to a topic which doesn’t get much press or discussion in public forums – the Private Mortgage Insurance Industry – or PMI business as it’s commonly referred to in housing circles.
Some changes are occurring in the structure of how a mortgage loan is priced for mortgage insurance. In the old days, it was simply loan-to-value and occupancy-type which would be the variables used in figuring out percentages used for the PMI calculations.
In today’s more complex mortgage world, the use of credit scores – in parallel with the risk-based pricing model, is now becoming more the norm for figuring out what the appropriate factors are. Translation to plain English: If you have a good credit score, you’ll be considered a lower risk factor, which may translate into a more attractive or less expensive Mortgage Insurance Policy.
Talk to your mortgage lender about how these changes are being implemented – and how you can possibly take advantage of a savings within the mortgage process. Every little bit helps.