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Thanks- I found another analysis that indicated that the upfront costs paid are amortized over the length of the mortage. Therefore, I would be entitled to deduct 1/360 a month for 30 years. Similar to points on refinancing.

Taxpayers bought a home in 2007 via FHA. At settlemetn they paid a FHA PMI upfront charge of $3,300. On the mortgage statement, only the monthly premium was reproted of $178. Is the upfront charge reflected ont he settlement sheet deductable as PMI in 2007? If so, how do you deal with the difference with the 1098? Since the taxpayers bought the home in late 2007, this amount is the difference between them itemizing or taking the standard deduction. Thank you.