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How do I know how much house I can afford? |
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Generally speaking, you can purchase a home with a value of two or three times your annual household income. However, the amount that you can borrow will also depend upon your employment history, credit history, current savings and debts, and the amount of down payment you are willing to make. You may also be able to take advantage of special loan programs for first time buyers to purchase a home with a higher value. Give us a call, and we can help you determine exactly how much you can afford. |
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How do I know which type of mortgage is best for me? |
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There is no simple formula to determine the type of mortgage that is best for you. This choice depends on a number of factors, including your current financial picture and how long you intend to keep your house. American Dreams Mortgage Services can help you evaluate your choices and help you make the most appropriate decision. |
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What does my mortgage payment include? |
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For most homeowners, the monthly mortgage payments include three separate parts: Principal: Repayment on the amount borrowedInterest: Payment to the lender for the amount borrowedTaxes & Insurance: Monthly payments are normally made into a special escrow account for items like hazard insurance and property taxes. This feature is sometimes optional, in which case the fees will be paid by you directly to the County Tax Assessor and property insurance company. |
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How much cash will I need to purchase a home? |
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The amount of cash that is necessary depends on a number of items. Generally speaking, though, you will need to supply:Earnest Money: The deposit that is supplied when you make an offer on the houseDown Payment: A percentage of the cost of the home that is due at settlementClosing Costs: Costs associated with processing paperwork to purchase or refinance a house |
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WHAT TAX DEDUCTIONS CAN I GET? |
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If you're a homeowner, or thinking about becoming one it's always a good idea to make sure you haven't missed any tax deductions. You may not be able to take all of these deductions, so please check with your tax advisor.
Mortgage Interest
Did you know that mortgage interest is tax-deductible? You're allowed to deduct the interest on a loan secured by your first or second home. You may be somewhat limited if all mortgages on your home total either more than the fair market value of your home, or more than $1 million ($500,000 if you're married and filing separately from your spouse); or if your home equity loans total more than $100,000 ($50,000 if you're married and filing separately). But be sure you're not missing out on this one -- mortgage interest is a big deduction that some homeowners don't even know about.
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Buy vs. Rent |
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Buy vs. Rent Comparison
The chart below shows a cost comparison for a renter and a homeowner over a seven-year period.
- The renter starts out paying $800 per month with annual increases of 5%.
- The homeowner purchases a home for $110,000 and pays a monthly mortgage of $1,000.
- After 6 years, the homeowner's payment is lower than the renter's monthly payment.
- With the tax savings of home ownership, the homeowner's payment is less than the rental payment after 3 years.
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