CHAPTER 8 Shopping for a Home Loan
The decision to buy a home puts you into a realm full of things you have not dealt with prior, especially if you used to rent your home. Owning a house brings 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 a powerful financial planning tool. Calculate the amount of mortgage interest deduction and include that in your annual financial planning. Some of the nondeductible items include home repairs, general closing charges, as well as property hazard insurance premiums. 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 include the amount of annual taxes within the mortgage payment. The mortgage servicer will pay the taxes as they are due. When buying a house, your lender will calculate the total amount of real estate taxes, as well as the number of days in a property tax year that you were the owner of the said property and add that amount to the mortgage payment. People have been known to spend months looking for the best possible home and eventually find a good one. However, many of 61
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