CHAPTER 8 Shopping for a Home Loan or a Home Loan
Navigating the housing market can feel daunting-especially for those who've faced challenges with mortgages in the past. Stricter lending standards, introduced in response to past lender practices, have made qualifying for a mortgage more difficult in recent years. However, the landscape is beginning to shift. Signs of improvement are emerging as banks ease some of their stricter requirements, and lenders begin offering mortgage options with lower down payment thresholds. With the housing market gaining momentum and more buyers entering the scene, now may be a promising time to take the leap. If homeownership is your goal, this could be the perfect moment to start preparing for the journey ahead. Owning is very different from renting. 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 60
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