CHAPTER 8 Shopping for a Home Loan or a Home Loan
The decision to buy a home is part of the American Dream. It's a great investment opportunity for yourself and your future. Let's face it, paying rent benefits someone else's financial stability and not your own. Owning a house is a whole new experience. For example, consider taxes and mortgages. When you’re looking to purchase a home, it’s important to understand what can be deducted and what can’t. A powerful piece of information many home buyers overlook is the effect of mortgage interest on their federal income tax payments. Mortgage interest is deductible and a powerful financial planning tool. Calculate the amount of mortgage interest deduction and include that in your annual financial planning. Then, make a point of checking Internal Revenue Service (IRS) Form 1098 from the lender at the end of the year. This form shows the amount of mortgage interest that you’ve paid. Some of the nondeductible items include home repairs, general closing charges, homeowners’ association dues, as well as property hazard insurance premiums. Getting a loan to purchase a home can have it's challenges, but with the right guidance and education the challenges can easily be overcome. Some of the terms and language used in purchasing a home may be unfamiliar to you. For example, the term “discount points,” refers to how much it will cost you to buy the rate down. By paying discount points and buying the rate down you will decrease your monthly mortgage payment. This action is called, "buying down the rate”.
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