Answers - Real Estate

Starting on January 1, 2007, private mortgage insurance became a deductible expense for n

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

ew borrowers with less than a $100,000 income. This new legislation will help homebuyers

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

who may have chose to a more risky piggy-back type of loan to avoid PMI over the past few

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

years.

So what is PMI?

In a conventional mortgage, a buyer is required to

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

put down a 20% down payment based on the sale price of the home. Private mortgage insuran

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

ce is paid when a buyer does not the full 20%. The fee is paid monthly by the buyer to pr

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

otect the lender in the event of foreclosure. It is paid until equity accumulates to a p

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

oint where there is 20% ownership of the home.

Avoiding PMI with Piggy-back Loans

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

In recent years, many buyers in an effort to avoid paying PMI have used a piggy-b

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

ack or secondary loan for their down payment. In this scenario, the second loan is often

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

similar to a home equity loan. Often it will be have an adjustable interest rate and/or a

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

balloon payment that will come due in 3 to 5 years.

So Which is Best? PMI or Pigg

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

yback?

It will really depend on your situation. With the deductible aspect to PMI,

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

it is worth considering again. If your home appreciates or you are able to put in some “

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

sweat equity” to increase the accumulated equity of the home to the 20% of the appraised

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

value, in most cases the PMI will be cancelled. However with a second loan, you will cont

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

inue to make payments until the loan is paid in full.

To make the best decision, d

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

iscuss your all options with your Realtor and Mortgage or Loan Officer. Working with trus

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

ted professionals to explain all aspects of various loan products help you to select the

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

best mortgage that works to meet your financial goals.

Copyright 2007 Teri Eckholm

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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Answers - Private Mortgage Insurance (PMI) Update—Now Tax Deductible

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