5 Mortgage Rules You Should Know by Heart

If you’re buying a house or refinancing your loan, here’s what you need to know.house_f4nehsc_large_large

For millions of Americans, a mortgage is the biggest debt they’ll ever have to repay. Unfortunately, as anyone who’s ever gone through the process can attest, mortgages involve pages and pages of legal documentation that can be nearly impossible for most people to comprehend. To simplify mortgages, there are some basic guidelines that anyone can learn and commit to memory. Below, we’ll go through five useful rules about mortgages.

Rule 1: Keep your mortgage payment to 25% or less of your income.

Housing costs are typically the largest expense item in your household budget, but that doesn’t mean you can afford to break the bank. Lenders look closely at your income to determine how much you can truly afford to pay for a monthly mortgage payment, and one simple guideline they use is to take your available income and multiply it by 25%. If a mortgage would require larger payments than that, after taking into account both the loan itself and associated payments like property taxes and insurance, then a lender will generally be less comfortable in giving you the loan.

Rule 2: Avoid private mortgage insurance by making a 20% down payment.

Mortgage lenders typically require borrowers to obtain private mortgage insurance or PMI if they make a down payment that’s less than 20% of the value of the home. PMI protects lenders against the risk that the value of the home will fall below the outstanding principal balance on the mortgage, leaving the borrower “underwater” on the loan. For borrowers, however, it’s an added expense that essentially provides no value to them. As difficult as it can be to save up a 20% down payment, the hundreds of dollars in PMI that it will save you could make the difference between being able to afford a slightly more expensive home and having to settle for less.

Rule 3: Understand how adjustable rate mortgages work and what risks are involved.

Fixed mortgages are easier to understand because the interest rate that they charge never changes, so you can count on monthly mortgage payments remaining constant throughout the lifetime of your loan. That’s not the case with adjustable rate mortgages or ARMs, which only remain fixed for a set period. Most lenders refer to ARMs with two numbers, such as 5/1. The first number refers to how long the initial rate remains in place. The second number describes how often the rate adjusts after the initial rate ends. For a 5/1 ARM, the initial rate stays in place for five years, and then changes every year after that. When rates change, they’ll also change your monthly payment, so make sure you understand the illustrations that your mortgage documents will provide so you don’t get a nasty surprise at the end of the initial term.

Rule 4: Know whether you’ll actually be able to deduct your mortgage expenses.

Many people look forward to being able to deduct mortgage interest, property taxes, and other key expenses of owning a home. But one thing to keep in mind is that all of these tax breaks are only available if you itemize deductions on your tax return. If the cost of your interest and taxes isn’t enough, when combined with other itemized deductions, to exceed the standard deduction you’re entitled to receive, then buying a home won’t do you any good from a tax perspective. That shouldn’t necessarily stop you from making a purchase and taking out a mortgage loan, but it should inform you as to the true cost of doing so.

Rule 5: Be careful diverting retirement money toward a home purchase.

The tax laws governing retirement accounts allow you to make withdrawals from an IRA of up to $10,000 toward a first-time home purchase without having to pay the typical penalties for early withdrawal of your retirement savings. However, just because you can use IRA money toward a home purchase doesn’t mean you should. First, even though you won’t owe penalties, you will owe income tax on the money you withdraw, potentially leaving you with a big tax shortfall at the end of the year. More importantly, diverting that money from your retirement savings will leave you in a less favorable position in the long run with the size of your nest egg. As a potential source of down payment money, tapping an IRA can seem like a smart move, but be aware of the long-term consequences before you pull the trigger.

Buying a home will probably be the biggest purchase you ever make. Being smart about the debt you incur to buy your home is essential to avoid the mistakes that so many homeowners made during the financial crisis. Keeping these rules in mind will take you a long way toward a better understanding of the mortgage process and your mortgage loan.

 

Source:  http://www.fool.com/investing/2016/05/28/5-mortgage-rules-you-should-know-by-heart.aspx?source=iedfolrf0000001

6825 N 39th Place Paradise Valley, AZ 85253

$7,450,000
4 Beds
4.5 Baths
6,209 SqFt
Status Active
MLS # 6542969
Property Type Single Family Residence
Price Type --
New luxury hillside construction with a Q4 2024 delivery. Positioned high up the mountain, on a private 1+ acre lot in a 24hr guard-gated enclave in Paradise Valley. Glass tile pool and spa, Cristallo Quartzite slabs, and custom cabinetry throughout. One of the only hillside homes with a level grass yard! Embrace Arizona's indoor / outdoor living, while enjoying privacy and city light views. 6,200+ SF with (4) ensuite bedrooms, a glass walled exercise room, study and 3-car garage w/ room for 3 lifts. Attached guest suite with a separate entrance from the outside, and its own private patio with mountain views This luxury construction has all the materials and upgrades that a sophisticated buyer expects. Crestron / Lutron, 9 security cameras. The DNP HOMES quality must be seen!

9203 E Brahma Road Scottsdale, AZ 85262

$7,450,000
5 Beds
7 Baths
9,000 SqFt
Status Active
MLS # 6777297
Property Type Single Family Residence
Price Type --
Experience the epitome of luxury and seclusion in this award-winning Spanish Santa Barbara estate, nestled on 12.86 acres of pristine desert land with stunning panoramic views of the Sonoran Desert and surrounding mountains. This breathtaking home, honored with the prestigious Vision Design Award for Best Outdoor Shading in 2022, seamlessly blends indoor and outdoor living with a 36-foot movable glass wall leading to a private backyard retreat. From the dramatic stone fireplace in the great room to the vaulted wood-beamed ceilings and elegant stone walls, every detail speaks of timeless sophistication. The chef's kitchen is equipped with top-of-the-line Viking appliances, including four wine and beverage refrigerators, while the wine cellar and custom cabinetry offer an exceptional setting for entertaining.With 9,000 square feet of living space, all on one level with no interior steps, this 5-bedroom, 7-bath estate is designed for ultimate comfort and privacy. The luxurious master suite features a Cantera stone fireplace and dual his-and-her baths with separate showers, water closets, and vanities. An attached guest suite provides ample space with its own kitchen, family room, and two fireplaces. Outdoors, the estate continues to impress with a 35 thousand gallon negative edge pool, spa, fire pit, and multiple patios that capture the beauty of the surrounding landscape. Additional amenities include a media room with a wet bar, a full-size pickleball court in the garage, with space for up to 8 vehicles and a circular motor court. Enhancing the home's efficiency, it features an Avena Solar system, significantly reducing energy costs and promoting sustainable living. Enjoy the private trail leading to the wash, this home seamlessly combines elegance, tranquility, and peace of mind.

4836 E White Gates Drive Phoenix, AZ 85018

$7,300,000 - 4Br/6Ba -  for Sale in Red Rock, Phoenix
Open House
$7,300,000
4 Beds
5.5 Baths
7,100 SqFt
Status Active
MLS # 6781919
Property Type Single Family Residence
Price Type --
• CAMELBACK MOUNTAINSIDE +Unbeaten Valley Wide SUNRISE to SUNSET•180° VIEWS •CITYLIGHTS •DOWNTOWN SKYLINE •MOUNTAIN VIEWS • All ON 1-Level & Privately GATED ESTATE w GUEST CASITA •Negative-Edge Pool•Spa •Grass Lawn Play Yard +MiniSport Golf Putting Course •THEATER-Game rm •(5) EN-SUITE BRs w Vaulted/Beamed Ceilings •Carved Walnut •Italian Travertine warm Venetian Plaster and SANTA BARBARA style.• Circle Driveway • 3 Car Garage w •Ample GUEST PARKING •Over 7,000'sf w Ideal N/S Exposure on a moderately Larger Than 1 Acre PARADISE VALLEY like lot •Walk-In WINE CELLAR •VIKING Appliances •Open Breakfast Island •Formal Living •Family Great Rooms •Executive Home Office multiple Fireplaces SUNSETS Elevated Over Arcadia Camelback Mountainside

4636 E Moonlight Way Paradise Valley, AZ 85253

$7,295,000
7 Beds
6.5 Baths
9,066 SqFt
Status Active
MLS # 6781732
Property Type Single Family Residence
Price Type --
Gorgeous home with NO HOA comes fully furnished, down to the towels! Perfectly nestled in the Phoenix Mountain Preserve, with unobstructed mountain, valley & city light views. Stunning Turkish Versailles travertine & hardwood flooring throughout, one of the many beauties of this home are all of the indoor/outdoor living options. The chefs kitchen looks out onto a''rainforest'' waterfall, stainless steel appliances, slab granite counters & custom cabinetry.The primary suite, built in a rotunda design, boasts 360 degree views.

11987 E Buckskin Trail Scottsdale, AZ 85255

$7,250,000
5 Beds
5.5 Baths
6,505 SqFt
Status Active
MLS # 6759737
Property Type Single Family Residence
Price Type --
Plans are approved and ready for permits to break ground on this stunning desert modern prairie estate designed in collaboration with renowned architect Cosan Studio and brought to life by luxury builder Desert Sky Development. Situated on a 2.26 acre cul-de-sac lot in the exclusive gated Troon Canyon Estates, featuring just 11 homesites and unobstructed views. This To Be Built project gives you an opportunity to work directly with the design team to make your custom selections throughout the process. Arrive through your auto-court to your 4 car garage, including an additional full size RV Garage/showroom at the front of property. Featuring 6,505 sq.ft of single-story living, the main residence offers an expansive kitchen and great room with floor to ceiling windows overlooking your resort style backyard and the natural desert beauty and distant mountain views. A wet bar with a retractable glass wall, ample covered patio space with fireplace and outdoor kitchen and BBQ make indoor/outdoor entertainment seamless and the ultimate in luxury living. A private trail leads to a totally secluded 2 bedroom guest casita with full kitchen and living room for any visitors to enjoy their own space away from the main house. Wolf & SubZero appliance package will be included throughout.

18651 N 101st Place Scottsdale, AZ 85255

$7,250,000
5 Beds
5.5 Baths
5,880 SqFt
Status Active
MLS # 6759632
Property Type Single Family Residence
Price Type --
Refined elegance with a melody of eclectic Southwest aesthetic, this Silverleaf Casita was a custom creation of architect Jeff Berkus and is ideally situated on two homesites backing to a craig maximizes the Sonoran surrounding views. Using a mix of materials and influences brings a fresh twist to Southwest style. With attention to detail in design, this home offers functional living spaces with 5 bedrooms, 6 baths including a private entry guest house, and an upstairs bunkroom/den with expansive patio overlooking pool and outdoor living, plus executive office, theatre room, and hobby room. Sensible sophistication at its finest with stone surfaces and reclaimed finishes, and open layout that suits the region's indoor-outdoor lifestyle, with plenty of gathering spots to accommodate friends and family. Brought to life with authentic detailed interiors by Caroline DeCesare of acclaimed DeCesare Design Group. Hand crafted and carved built-ins by Scottie Reid include the dining room breakfront, living room bookcase, and iron-strapped kitchen island. Inspired by a visit to Italy the owner's incorporated features bursting with graceful character throughout including a Mosaic kitchen mural imported from Italy, and Murano glass chandelier in dining room hand-picked by owner while visiting Venice. Hand painted ceilings offer a subtle use of pattern fostering an air of elegance. Abounding with exclusive finishes Italian style limestone mantel, beam-lined ceiling, and antiqued cabinets. An entertaining dream with rooms flowing from one to another opening with telescoping glass doors to the outdoor living spaces backing to a distinct craig backdrop with intentional southwest exposure for 'winter summers' featuring an alfresco dining room with fireplace, pool with water feature and spa, covered ramada with fireplace, eat in outdoor kitchen, and firepit with sitting area. Eat in kitchen island boasting Wolf and SubZero appliances, with stylish limestone vent, with an appropriate butler bar with wine fridge, coffee maker, microwave and refrigerator. Owner's suite impresses with a sophisticated Southwest flare with intricate turquoise hues in threaded in the plaster, shapely tiles custom colored to marry the suite hue with rustic brown patina reflected in the carved vanity and copper soaking tub. Desirable 3 car garage pristinely maintained. Lutron home system. Located in the coveted 32 home cove, conveniently located just off the drive to the Silverleaf clubhouse, the Casitas modeled after the Silverleaf clubhouse, are eminent in style and design, for the most discerning homeowner

8601 N 64th Place Paradise Valley, AZ 85253

$7,250,000 - 4Br/5Ba -  for Sale in Camelback Country Estates 1 Lot 24, Paradise Valley
Open House
$7,250,000
4 Beds
4.5 Baths
7,445 SqFt
Status Active
MLS # 6709079
Property Type Single Family Residence
Price Type --
Experience timeless sophistication and charm in this COMPLETELY REBUILT Paradise Valley Estate. Nestled amidst breathtaking mountain views and verdant landscaping, this home offers an oasis of tranquility. Situated on a lush green cul de sac acre+, Paradise Valley is the heart of Arizona and is now being boasted by the Wall Street Journal as one of the most desirable neighborhood's in the United States. Step inside to discover a seamless fusion of traditional allure and contemporary refinement. The spacious layout effortlessly connects living areas, showcasing a gourmet kitchen adorned with high-end appliances and unparalleled designer finishes. Retreat to the primary suite boasting a luxurious spa style bathroom and sensational his + her closets that will have your head spinning. Alongside the primary suite, discover three additional ensuite bedrooms, an office, and a den. Outside, indulge in year round al fresco dining pool side or relax your muscles in the heated spa. This sprawling property offers plenty of room to add a guest retreat or sport pickle ball court. Too many stellar features to mention .... you will not be disappointed!

10285 E Chama Road Scottsdale, AZ 85255

$7,200,000
4 Beds
4.5 Baths
5,932 SqFt
Status Active
MLS # 6764129
Property Type Single Family Residence
Price Type --
THE best lot in Skye View! Exceptional 5,932 square foot modern dream home featuring beautifully landscaped desert gardens and a luxe resort-style backyard. Breathtaking mountain and city light views in every direction! Built in 2024, this prestigious N. Scottsdale modern contemporary home is just minutes away from McDowell Mountain Regional Park and Tonto National Forest, access to the 101 Fwy, Scottsdale Quarter, Kierland, and Promenade restaurants and shopping, and close to some of the top AZ golf courses including The Estancia Club, Troon North, Mirabel, and more. With its distinctive architecture and award-winning contemporary design, the home was designed and built by Camelot Homes, boasting an unrivaled attention to detail. The open floor plan is perfect for entertaining, inviting the outdoors in. All the living spaces have direct access to the outdoor spaces which include a front entry portico, fully shaded outdoor living/ loggia with fire feature, dining on back patio, bonus room plus indoor bar with stacked telescoping doors, outdoor grill, and a dedicated loggia for the guest casita. The backyard is highlighted by breathtaking sunset views, custom heated pool with two Baja decks, water features, built-in planters, poolside seating area, separate spa, and lush artificial turf. The home includes a dramatic front entry, well-appointed gourmet kitchen overlooking main living areas, 4 bedrooms, 4.5 bathrooms, office/ den, guest casita, and 4 car garage specialty space that can be used as a home gym or flex space. Additionally, the home boasts Rift Oak cabinetry throughout, honed Quartz countertops, large format Porcelain tile flooring, custom metal iron clad fireplace, Wolf Sub-Zero appliances, temperature-controlled wine cellar, Zip Tap (instant chilled, instant hot, and sparkling water), Butler's Pantry, designer lighting and plumbing fixtures, elevated ceiling heights, glass detailing, Savant Audio Visual system, motorized designer window coverings in all rooms, security cameras, double stack laundry and LG styler garment refresher drycleaner, Sonance landscape speakers, and specialty details throughout. The primary bedroom suite features a luxurious primary bath, custom cabinetry, designer lighting/ plumbing fixtures, porcelain tile flooring, dual vanities, expansive walk-in shower and soaking tub with telescoping door that opens to the backyard with mountain and city light views, and spacious his /hers walk-in closet. Soak in world-class views of Pinnacle Peak, Troon Mountain, and Desert Highlands from this custom-built home. This is one of the finest properties available on the luxury market!

28805 N 114th Street Scottsdale, AZ 85262

$7,150,000
5 Beds
5.5 Baths
6,389 SqFt
Status Active
MLS # 6753068
Property Type Single Family Residence
Price Type --
ESTIMATED COMPLETION NOVEMBER OF 2024. Stunning North Scottsdale Estate located in Goldie Brown Ranch. One of three exclusive custom offerings each with their own private gated drive. This sophisticated and contemporary styled single level home is designed in collaboration with Swaback Architects and builder Sonora West Development. The floor plan features an open great room concept with 5 bedrooms + office, 5.5 bathrooms a large 4 car garage and guest casita. Situated on over 4 acres with unobstructed 360 degree views of Tom's Thumb, the McDowell Mountain Preserve, Pinnacle Peak and Four Peaks. Enjoy stunning sunsets and city lights from this wide open site.

5502 E Mariposa Street Phoenix, AZ 85018

$7,075,000
5 Beds
4.5 Baths
5,858 SqFt
Status Active
MLS # 6723868
Property Type Single Family Residence
Price Type --
Discover this stunning 5,858 sq ft, 5 bed, 4.5 bath home, nestled in a tranquil cul-de-sac in the heart of Arcadia Proper. Enjoy breathtaking Camelback Mountain views from this luxurious residence, featuring three versatile flex spaces perfect for a home office, gym, or media room. The lush, mature landscaping surrounds a private sport court, offering endless outdoor fun. With a spacious 3-car garage, this home provides ample storage and convenience. Perfect for entertaining and everyday living, this exquisite property combines elegance and comfort in one of the most sought-after locations. Don't miss this rare opportunity to own a piece of Arcadia's charm!

Tbd San Rafael Valley Road Patagonia, AZ 85624

$7,000,000
2 Beds
3 Baths
1,500 SqFt
Status Active
MLS # 6781316
Property Type Single Family Residence
Price Type --
This is arguably the most beautiful ranch in Arizona in one of the most scenic, coveted ranching locations in the American West. Covering 6,066 +/- acres in the heart of the spectacular San Rafael Valley in southeast Arizona. The Lazy J2 Ranch is a working cattle ranch with a carrying capacity of 200 head year round. The ranch consist of 954 +/- deeded acres with six large pastures, several smaller pastures & a charming ranch home. It also includes the 5,112 +/- acre A-Bar Draw USFS allotment with five large pastures. The deeded & leased land are very well watered with multiple wells, tanks, water lines & fences are in very good condition. Entering this very private, heavenly valley is a truly a breath taking event every time. VERY ATTRACTIVE SELLER FINANCING AVAILABLE!! The flowing grasslands surrounded by the blue & lavender mountains create a site that is easy to fall in love with. It lies between the Patagonia Mountains west, Huachuca Mountains east and the Canelo Hills north. The San Rafael is an uncommon, sequestered hidden valley unknown to many native Arizonans, yet is the location for over 50 feature films including OKLAHOMA. It is an extraordinarily unique piece of the American West, steeped in history as the western entry point for the Europeans into what is now the United States in 1539, to the Apaches and Buffalo Soldiers in the 1800s. The San Rafael Valley has been a successful ranching landscape for generations of many families for hundreds of years. Perfectly situated between 4,800 and 6,000 feet elevation, the climate is mild and pleasant year round. Temperatures range from the 80s to 90s in the summers and 50s to 60s in the winter. Annual rainfall is typically 17 to 20 inches. It is the one of the last intact short grass prairies left in the western United States. The headwaters of the Santa Cruz River originate in this valley and is adjacent to the ranch. The San Rafael and these estate parcels are blessed with a collection of gorgeous, sweeping rolling hills with a myriad of native grasses, scattered Oak trees and towering Cottonwoods in the meandering creek beds that run seasonally. Eighty percent of the San Rafael Valley, including the Lazy J2 Ranch Estates, have been placed under Conservation Easements by private property owners to protect the unparalleled beauty and pristine environment. The building envelopes have been discretely placed out-of-site to preserve the sweeping landscape vistas and magnificent view shed. J2 South has a building site of 17.8 acres and J2 North has a building envelope of 20 acres. Underground power and telephone run through the valley and are available to both sites. The Conservation Easements are held by the Arizona Land and Water Trust. This is an amazingly rare opportunity and maybe a once in a lifetime chance to own a part of this very special valley. Normally the ranches here are passed along by families from one generation to the next. Come and visit and see for yourself the remarkable property that is the Lazy J2 Ranch Estates. Parcels start at $3,225,000 with excellent seller financing possible for both remaining parcels. Seller's successful San Rafael Valley Grass-Fed Beef business available.

2007 E Ranch Road Tempe, AZ 85284

$7,000,000
4 Beds
4.5 Baths
6,480 SqFt
Status Active
MLS # 6771578
Property Type Single Family Residence
Price Type --
This custom new construction home in the prestigious Circle G community in Tempe is a stunning 6,480-square-foot masterpiece, nestled on a spacious 33,890-square-foot lot. With its Bali resort-inspired design, this home embodies luxury and tranquility, showcasing a harmonious blend of white oak wood and natural tones that flow throughout. Thoughtful attention to detail is evident in every corner, from the elegant lighting to the custom finishes. The grand entrance features a circular driveway leading to a welcoming patio area with a cozy gas fireplace, perfect for sipping coffee in the morning. As you approach the large iron front door, you'll find a private attached casita to the east. (click More for the full description and remarks). This casita offers built-in custom cabinetry, a sitting area, a full bathroom with intricate stonework, and a charming Dutch door, allowing guests to enjoy the front patio ambiance. Across from the casita, the Parisian-inspired office is a showstopper, featuring black-and-white checkered flooring, built-in cabinetry, and a picturesque view of the gas fireplace on the front porch. Upon entering the main house, you are greeted by soaring 14-foot ceilings and a dramatic double-sided gas fireplace, clad in stone on both sides, which creates a seamless flow between the living areas. The kitchen is a chef's dream, with a 16-foot island, two dishwashers, a custom built-in Sub-Zero refrigerator, a gas cooktop and range, a Meile espresso machine, and a pot filler. The oversized single-basin sink and endless cabinetry provide both function and style. The formal dining area is a true entertainer's delight, featuring cantilever doors that open up to the exterior pool and patio space, creating a seamless indoor-outdoor experience. Located in the dining area is a wine chiller room, designed to hold over 800 bottles, ensuring your collection is stored in perfect conditions. On the east side of the home are the secondary bedrooms, both of which share a bathroom with a large walk-in shower and custom tile finishes. Also on this side is a large office with an iron door that matches the main entryway, overlooking one side of the double-sided fireplace. The office includes a walk-in closet with built-in storage for files and office supplies. The entertainment room is designed for hosting, featuring cantilever doors, built-in cabinetry, a microwave, an ice machine, and a TV video wall that allows you to watch four different screens simultaneously. This room offers one of the best views of the backyard and pool, making it a perfect space for relaxation and entertaining. The primary bedroom is a private oasis, located to the west of the home, complete with a serene sitting area and an outdoor shower for an added touch of resort-style living. The room offers two private exits to the backyard and private side sitting area, with custom electronic shades on the bedroom windows and main door. This space feels like a 5-star retreat, offering a spa-like bathroom with dual vanities, extensive cabinetry, a one-piece marble tub, and a walk-in shower equipped with a state-of-the-art shower head system. Additionally, the suite includes a personal gym, leading to a grand walk-in closet with custom cabinetry and a built-in island for storing jewelry, watches, and accessories. The backyard is designed for entertaining, featuring a full-size pickleball court with built-in surround sound and a designated area for hosting guests and their beverages. The pool ranges from 5 feet to 3.5 feet deep and offers multiple sitting areas, loungers, a waterfall, and even a floating bed. The outdoor open gazebo includes a hidden storage area for tables, chairs, and pool items, perfect for hosting gatherings. Along the exterior edge of the home, nestled within the ficus hedges, you will find water spigots and electrical outlets, making large-scale entertaining a breeze. With multiple locations throughout the property for entertaining, this home offers details that go above and beyond the usual. Commercial-grade water filtration stations are located in three parts of the home for the utmost convenience. The home also features a 1,500-square-foot attic space, and finishes that have been collected from all over the world for the past several years. Construction is slated to be completed by the end of 2024, and the buyer still has the opportunity to select finishes. Custom furniture pieces have already been ordered, and the buyer has the option to purchase them. The butler's pantry and laundry room are equally impressive, featuring another island with a single-basin sink, two washers, two dryers, ample storage, and a full-size Sub-Zero refrigerator for additional cold storage. It's also pre-plumbed for an additional dishwasher, oven, and built-in pet water bowls. This home is the epitome of thoughtful design and luxury living, where no detail has been overlooked. You must see it to believe it.

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