Bill Overview
Title: Middle Class Mortgage Insurance Premium Act of 2022
Description: This bill increases the adjusted gross income threshold for the phaseout of the mortgage insurance premium tax deduction and makes such deduction permanent.
Sponsors: Sen. Hassan, Margaret Wood [D-NH]
Target Audience
Population: Middle-class homeowners paying mortgage insurance
Estimated Size: 30000000
- The bill increases the adjusted gross income threshold for the phaseout of the mortgage insurance premium tax deduction, which directly impacts those currently near or within the existing phaseout threshold.
- Making the mortgage insurance premium tax deduction permanent affects anyone who pays for mortgage insurance as part of their home financing.
- Middle-class homeowners are likely the primary group benefiting, as they are more likely to fall within the target income range for taking advantage of this deduction.
- According to Pew Research, the middle-class represents approximately 50% of the U.S. adult population.
- Middle-class homeowners often utilize mortgage insurance premiums when they have less than 20% equity in their homes, making them directly impacted by this legislation.
Reasoning
- The policy mainly affects middle-class homeowners who are paying mortgage insurance, potentially due to having less than 20% equity in their homes.
- The budget constraint will limit the number of households that can benefit from the policy each year, with an estimate of approximately 30 million potentially eligible households in the U.S.
- Some homeowners who do not closely follow policy changes might not immediately modify their perceptions or economic behavior even if their financial conditions improve.
- The broader impact on wellbeing will depend on how much the financial relief provided by the policy affects individuals' overall financial stability and security.
- The demographic variability in terms of location, age, and household structure needs to be considered, as it might influence how the benefits are perceived.
Simulated Interviews
Software Engineer (Austin, TX)
Age: 34 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 15/20
Statement of Opinion:
- I'm hopeful that any financial breaks can help me pay off my mortgage quicker.
- This policy might make a real difference in the next few years as I build equity.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Production manager (Columbus, OH)
Age: 45 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 12/20
Statement of Opinion:
- Any savings help since our budget is tight with kids in school.
- Not having to worry about the deduction expiring is comforting.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 5 |
Real estate agent (Las Vegas, NV)
Age: 52 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 3.0 years
Commonness: 14/20
Statement of Opinion:
- It's great to see support for homeowners who don't have 20% down yet.
- This could ease a bit of my monthly financial pressure.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 5 | 5 |
Data Analyst (Seattle, WA)
Age: 29 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 2.0 years
Commonness: 10/20
Statement of Opinion:
- Policy won't change a lot overnight, but it's a safety net for future plans.
- It reinforces our decision to buy early even with mortgage insurance.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 7 |
| Year 20 | 7 | 7 |
Retired (Miami, FL)
Age: 61 | Gender: female
Wellbeing Before Policy: 4
Duration of Impact: 10.0 years
Commonness: 5/20
Statement of Opinion:
- Having less financial burden every month would positively impact my overall wellbeing.
- I hope such policies continue for those who need them.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 4 |
| Year 2 | 6 | 4 |
| Year 3 | 6 | 4 |
| Year 5 | 7 | 4 |
| Year 10 | 7 | 3 |
| Year 20 | 6 | 2 |
Graphic Designer (Portland, OR)
Age: 39 | Gender: other
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 14/20
Statement of Opinion:
- This could help stabilize our finances while working through career transitions.
- It's a small yet significant bit of support when trying to rebuild equity.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 5 |
Teacher (Chicago, IL)
Age: 50 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 12/20
Statement of Opinion:
- Keeping the deduction in place permanently helps planning for college expenses.
- Any reduction in financial stress is appreciated.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 4 |
| Year 20 | 5 | 4 |
Market Research Analyst (Atlanta, GA)
Age: 44 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 8.0 years
Commonness: 9/20
Statement of Opinion:
- The extra savings can definitely help with managing school costs for the kids.
- It's reassuring to know the deduction won't suddenly disappear.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 4 |
IT Specialist (San Diego, CA)
Age: 28 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 1.0 years
Commonness: 8/20
Statement of Opinion:
- It makes future homeownership seem more achievable.
- The deduction will help offset some purchasing costs when the time comes.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 6 |
Chef (New York, NY)
Age: 38 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 0.0 years
Commonness: 11/20
Statement of Opinion:
- The policy's passing isn't immediate for me, but it might be beneficial in case I decide to purchase eventually.
- It's a solid backup plan for financial deductions regarding home loans.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Cost Estimates
Year 1: $600000000 (Low: $500000000, High: $700000000)
Year 2: $610000000 (Low: $510000000, High: $710000000)
Year 3: $620000000 (Low: $520000000, High: $720000000)
Year 5: $640000000 (Low: $540000000, High: $740000000)
Year 10: $680000000 (Low: $570000000, High: $780000000)
Year 100: $1100000000 (Low: $920000000, High: $1280000000)
Key Considerations
- The impact of broader economic factors, such as inflation and housing market trends, could alter the effectiveness and perception of this deduction.
- Potential secondary economic effects due to increased disposable income among middle-class homeowners.
- Future legislative actions could alter tax code components affecting mortgage deductions and tax revenues.