However, the amount of cash you’ll save by buying the points depends on the number of points you buy. For instance, if your mortgage is $200,000 and you buy two points, you will owe $4,000 when closing. Further related to taxes and property ownership is that once you own a house, you’re a property owner, with the attendant obligation to pay property taxes. The usual method of paying property taxes is to escrow a portion (usually 1/12) of the annual tax bill each month and pay it along with the monthly loan payment. The mortgage servicing company will then pay the taxes as they come due. If the tax bill goes up, your monthly escrow amount will also go up. You may also be able to deduct the amount of the taxes paid off your income tax calculations. (always check with your tax professional about tax liabilities and benefits). According to a Bill passed by the U.S. Senate in 2014, homeowners can deduct mortgage insurance premiums from their taxes. Private Mortgage Insurance (PMI) is insurance from private insurance companies used with conventional loans to protect the lender if the homeowner stops making payments on their home loan. PMI can be required as a condition of a loan and arranged by the lender at the buyer’s expense. If PMI is required, it typically makes up a portion of your monthly mortgage payment, in addition to your principal, interest, property tax, and homeowner’s insurance. People have been known to spend months looking for the best possible home and eventually find a good one. However, many of these individuals fail to understand the importance of finding a good loan. In the end, the new homeowner has a nice home, but a bad deal when it comes to the mortgage.
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