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

16622 W Watkins Street Goodyear, AZ 85338

$649,990
4 Beds
2 Baths
3,498 SqFt
Status Active Under Contract
MLS # 6770504
Property Type Single Family Residence
Price Type --
Fixer-Upper opportunity sold AS-IS. Rare basement home on lush irrigated acre, No HOA, bring your dreams, toys & animals to enjoy the land & possibilities. Well loved home includes 4 bedrooms, 2 bathrooms & one unfinished bathroom plus 2 additional rooms for offices, craft rooms, storage, you choose. Spacious family with dining room at ground level & large family/bonus room in the basement. Two car garage with lots of room for parking on the extended driveway. Workshop storage room attached to the garage. Additional slab with newer shed in the backyard held 3 cars, offers space for extra storage & parking. Newer roof last 5 years. Energy efficient assumable solar panel lease. Mature fruit orchard has grapefruit, pink grapefruit, lemon, plum, apple, apricot, tangelo and tangerine trees.

10011 E Thistle Avenue Mesa, AZ 85212

$649,990
5 Beds
3 Baths
2,550 SqFt
Status Active Under Contract
MLS # 6771939
Property Type Single Family Residence
Price Type --
Reside at ONE OF ARIZONA'S MOST DESIRABLE MASTER PLAN COMMUNITIES IN THE SOUTHEAST VALLEY... The HAVE-IT-ALL RESORT LIFESTYLE ALL WITHIN... WELCOME TO CADENCE. Situated on a Prime Private Corner Stadium Palm View Home Site with only one neighboring property & Open-Air Views, this Newer 2023 TRI-POINTE Magazine Model Residence offers the TOTAL MOVE-IN READY HOME/COMMUNITY PACKAGE. Showcasing $73,500 in BUILDER LUXURY UPGRADES throughout + $40,000 invested in additional OWNER IMPROVEMENTS (See Upgrade List), Distinctive Modern Desert Exterior w/Front Portico Courtyard Entry/Patio, Step inside to the Open Great Room ''Vineyard'' Floor Plan influencing everyday functionality & featuring a Professional Chefs Gourmet Kitchen w/built-in appliances & high-end finishes/features everywhere, 12' Glass Wall Sliders influencing extraordinary Indoor/Outdoor themed views/festivities, downstairs bed/bath, large upstairs loft space, Private Owner Suite w/sizable walk-in closet, Finished 2-Car Garage w/Premium Organizational Features, Electric Outlet for Car Charging + Whole Home Water Softening/RO Systems, Today's Must-Have Energy Efficiencies you want in the Desert, Transition outside to the COMPLETELY FINISHED & REFINED LOW-MAINTENANCE GARDEN SPACE modeling covered patio, green turf package, extended hardscape borders/patios, landscape lighting accents, mature pygmy palms/flowering plants, Take in Sunset Views w/Scenic Resort Palms lining the Horizon, Beyond Your Front Door... Cadence is designed for a mixed use community featuring First-Class Amenities that go far beyond the norm. The Center Point of the community is The Square featuring a Play Pool with Twisting Chute Slides & Lap Pool, Spa, Moto - State of the Art Fitness Center, Flourish Community Center - Indoor/Outdoor Social Gatherings, Game On - Community Space filled with Games, Stir - Casual Social Hangout with Coffee/Tea, Several Parks throughout including a Dog Park for your furry family members, sports courts, Lush Resort-Style Community Landscaping with Palm Drives, Excelling School Options including Silver Valley Elementary within walking distance just down the street, Sequoia Pathfinder Academy & Basis just to the North & Prime proximity from San Tan 202 & 24 Freeways. With easy transportation access and surrounded by excellent employment, Cadence at Gateway is one the most successful communities in The Valley of the Sun! ***Homeowners recently completed 1-year walk-through with builder ensuring property was free of noted defects and/or discrepancies with workmanship. Avoid this stressful and time consuming phase in the new construction process, and take advantage of moving right in to this BETTER THAN NEW Move-in Ready Residence with Out-of-Pocket POST NEW DELIVERY Finishes already completed. EXPERIENCE IN PERSON. MAKE THIS LIMITED HOME OFFERING YOUR CADENCE SANCTUARY FOR THE HOLIDAY SEASON!

34946 N Jacobs Road San Tan Valley, AZ 85144

$649,990
3 Beds
2.5 Baths
2,692 SqFt
Status Active
MLS # 6716316
Property Type Single Family Residence
Price Type --
Welcome to your dream home! This beautifully designed 3-bedroom, 2.5-bath home offers not only a spacious, open floor plan but also a layout that perfectly balances style and functionality. Step into the expansive chef's kitchen, where you'll find high-end appliances, generous counter space, and an island ideal for entertaining and meal prep. Adjacent to the kitchen is a versatile bonus room, perfect for a home office, gym, or playroom. Need more space? In addition to a generously sized laundry room that can double as a craft room this home has an impressive, insulated 4-car garage. This vast space opens up endless possibilities - from a workshop or home gym to additional storage or even a cozy hangout area. This home has it all, luxury living at its finest. Garage is equipped with 240V outlet. Simply Safe system transfers with home.

12666 E Crystal Forest -- Gold Canyon, AZ 85118

$649,990
4 Beds
3.5 Baths
2,464 SqFt
Status Active
MLS # 6762842
Property Type Single Family Residence
Price Type --
Discover this stunning single-level, four-bedroom, three-bathroom home featuring N/S exposure and INCREDIBLE SUPERSTITION MOUNTAIN VIEWS. The light and bright split floor-plan offers spacious living with a large open room, and a versatile flex space. The kitchen is a chef's dream, boasting abundant counter space, cabinets, and a vast island for storage. Enjoy the outdoors with a full wall of windows showcasing the perfect view, leading to a beautiful sparkling pool, elevated spa, and open grassy area behind. The home also features BRAND-NEW CARPET and common areas both in front and behind. Built in 2019, this home is move-in ready!

310 S 4th Street Unit 2002 Phoenix, AZ 85004

$649,950
2 Beds
2.5 Baths
1,405 SqFt
Status Active
MLS # 6766851
Property Type Apartment
Price Type --
Unmatched Luxury with Breathtaking Views in the Heart of Downtown Phoenix! Perched on the 20th floor of The Summit at Copper Square, this stunning residence offers an extraordinary lifestyle with sweeping views of the city skyline, epic Arizona sunsets, and the majestic mountains beyond. Imagine coming home to floor-to-ceiling windows that showcase the best of Phoenix from every angle, blending modern luxury with urban convenience. Located just steps from Footprint Center and Chase Field, you'll be able to walk to enjoy Suns, and Diamondbacks games, as well as an endless rotation of world-class concerts and entertainment, all just minutes from your front door. This premier high-rise community offers everything you need to live in style, including a heated pool and spa, fire pit, media room, sauna, state-of-the-art fitness center, and an exclusive rooftop party room perfect for entertaining. Whether you're seeking the excitement of downtown living or a serene retreat high above the city, this unit delivers it all. Don't miss this rare opportunity to elevate your lifestyle. Experience downtown living with everything at your fingertips and start living the life you've been dreaming of today!

930 E San Juan Avenue Phoenix, AZ 85014

$649,950 - 3Br/3Ba -  for Sale in Townhouse Terrace 1, Phoenix
Open House
$649,950
3 Beds
3 Baths
1,903 SqFt
Status Active
MLS # 6766402
Property Type Single Family Residence
Price Type --
Price Enhancement! Location and Charm!! You do not want to miss this beautiful 3 bed/ 3 bath home nestled in the HEART of Uptown Phoenix. Highly coveted Madison School District! Cozy wood flooring and modern concrete floors will guide you throughout this well-designed residence. Your new kitchen awaits, with gorgeous granite countertops, stainless steel appliances and rich cabinetry, with a large walk-in pantry to store all of your cooking essentials. The primary suite and expansive walk-in closet, with welcoming natural light will surely impress! Your primary ensuite will provide double vanities, separate shower and a massive jetted tub! Entertain family and friends in your privately paved backyard with string lighting and mature trees, to set the mood for any occasion. The backyard storage shed could potentially be transformed into your very own casita or backyard office space, already equipped with electricity! The possibilities are at your fingertips. This home is ready for it's new owner, so book a private tour today!

26982 N 168th Lane Surprise, AZ 85387

$649,900
4 Beds
3 Baths
3,240 SqFt
Status Active
MLS # 6780165
Property Type Single Family Residence
Price Type --
FORMER MODEL HOME! This beautifully designed 4-bedroom, 3-bathroom, 3,240 sq. ft. home offers a luxurious living space. From the moment you step inside of this open concept, thoughtfully laid out floorplan, you'll notice the high level of upgrades throughout, including a gourmet deluxe kitchen equipped with top-of-the-line kitchen aid appliances, generous amount of cabinetry and countertop space. Making this the perfect home for entertaining. Opening your second level living to a sprawling loft of 32x12 sq ft, a primary suite that boasts a spa-like bathroom complete with a tub and shower combination for ultimate relaxation. Furniture is not included, but may be offered for an additional fee.

5028 Spring Garden Lane Prescott, AZ 86301

$649,900
3 Beds
3 Baths
1,845 SqFt
Status Active
MLS # 6776000
Property Type Single Family Residence
Price Type --
Nestled in the peaceful community of Walden Ranch, this home blends modern comfort with timeless elegance. The low-maintenance stucco exterior and tile roof reflect quality, while the oversized paver driveways and walkways wrap around the property, adding charm. Brick accents, exterior shutters, and board-and-batten details enhance the home's curb appeal. Inside, an open-concept, split-bedroom floor plan greets you with a spacious great room. The kitchen features newly refurbished white cabinetry, quartz counts, center island, and pendant lighting. GE appliances, including a 5-burner gas range and microwave, complete the kitchen, while the adjacent dining area is bathed in natural light from the large windows and a 9-ft slider that leads to the back patio. The master suite offers raised-height dual vanities, a walk-in shower with a built-in seat, and ample closet space. A private door opens to the back patio, where you can enjoy scenic views. Two guest bedrooms come with ceiling fans, and the front bedroom was extended during construction. The first guest bathroom includes a raised-height vanity and a full tub with a shower. The large laundry room, equipped with upper cabinetry and a hanging bar, doubles as a mudroom. With 10-ft ceilings and 8-ft doors throughout, the home feels spacious and open. New luxury wood-look vinyl flooring runs through most of the home, with wood laminate in the bedrooms, offering a carpet-free environment. The expanded, covered back patio overlooks a fully fenced backyard with no neighbors to the east, providing extra privacy. The HOA's deeded open space adds to the tranquility, with views of the Granite Dells and Constellation Trailhead. A storage shed in the side yard and a 3-car tandem garage with smart features, a utility sink, and plenty of natural light complete this thoughtfully designed home.

13480 N Gladstone Hill Place Marana, AZ 85658

$649,900
4 Beds
3 Baths
2,577 SqFt
Status Active
MLS # 6708581
Property Type Single Family Residence
Price Type --
Move in Ready, Just bring your toothbrush! Check out this beautiful 2577 sqft upgraded home situated in a private cul-de-sac with views of mountains all around!. Nestled in the preserve of the Tortolita Mountains and tucked down at the end of the cull de sac, this premium homesite offers unobstructed views of both the beautiful Tortolita Mountains and Preserve. Living here in Dove Mountain you will enjoy several golf options at both the Ritz Carlton Dove Mountain Golf Resort and The Gallery Golf Club. There is a myriad of living options within this highly upgraded 4 bedroom 3 FULL bath home. Maintenance free landscaping provides easy outdoor living with large enclosed patio and extended covered patio. Host your next family gathering or game night in the massive great room. The kitchen includes a gourmet kitchen, tiled backsplash, and white cabinetry. Wood-look plank tile has been extended. Brand New community - Close to Shopping & Entertainment - Come Live The Life in Dove Mountain! Marina Arizona is exploding with new growth and opportunities!

23426 N 122 Lane Sun City, AZ 85373

$649,900
5 Beds
4 Baths
3,837 SqFt
Status Active Under Contract
MLS # 6784200
Property Type Single Family Residence
Price Type --
Truely a unique gem with so many extra features waiting to be discovered! Spacious home w/5 large bedrooms & 4 baths. One full bath and bed down that has a huge walk-in closet with storage shelves. Master suite w/sitting area, 2 walk-in classy closets, one w/a hidden storage room! Ensuite has a fabulous walk-in shower and lovely soaking tub. Huge double loft could be 6/7th bedrooms. Built-in desk in loft and in one bedroom. Lots of storage throughout home. Newer flooring throughout, paint, garage doors, A/C, and water softener and fridge. Extra cabinets in the laundry room and garage. Very Private lot w/no neighbors behind, newer pool, water feature, hot tub, turf, sport court, RV gate w/26 ft concrete parking pad. High end automatic roll down shades on huge back patio for great shad

115 E Amaranth Drive Wickenburg, AZ 85390

$649,900
3 Beds
3 Baths
2,099 SqFt
Status Active
MLS # 6748927
Property Type Single Family Residence
Price Type --
A must see 2099 sq. ft ONE OWNER CUSTOM-built home with IRREPLACEABLE VIEWS situated on 4.8 acres!! The ''heart of the home'' boasts a double stainless oven, granite countertops, and expansive custom cabinets and even a pass-through window to serve those cold drinks to the sprawling backyard. The covered patio, mature desert landscaping, citrus trees and a stucco pony wall surround the back yard providing a perfect vantage point for sharing the spectacular views! The oversized garage includes MORE STORAGE cabinets. Thoughtful upgrades continue with vaulted ceilings, expansive picture windows, cozy wood stove, and TWO separate HVAC units with separate thermostats. Enjoy the WELL water, BONUS detached workshop featuring many built-in workbenches and plenty of hobby space.

9565 W Marco Polo Road Peoria, AZ 85382

$649,900
2 Beds
2.5 Baths
2,339 SqFt
Status Active
MLS # 6755401
Property Type Single Family Residence
Price Type --
MILLION DOLLAR VIEW!! Elevated Golf Course Lot W/ Stunning Water Views Within Ironwood Estates At Westbrook Village.Kitchen Boasts Newer Cabinets W/Pull Out Drawers,Granite Counters,SS Appliances Including Gas Cooktop,Double Pantry W/Pull Outs.Kitchen And Primary Bedroom Have Bay Windows.2 Bedroom, 2.5 Baths. Guest Bedroom Is Used As An Office W/ Murphy Bed.Primary Bath Has 2 Sinks, Private Toilet Area, Granite Counters And A Huge Walk-In Shower! Both Baths Have Been Remodeled. Extended Covered Patio W/ Saltillo Tile, Built-In BBQ,Surround Sound,Ceiling Fans And Roll Down Screens! Plantation Shutters Through-Out! Kool Decking In Front Courtyard As Well As Sidewalk Leading To Back Covered Patio.Kool Deck Parking Pad Behind Lg Side Gate.HVAC 2023 And Roof 2017. Wrought Iron Fence Out Back!

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