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.

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

Listing types.

For Sale

For Rent

Land

Multifamily

Commercial

Location Search Nearby

BedsAny1+2+3+4+5+6+

BathsAny1+2+3+4+5+6+

Price MinAny$50,000$100,000$150,000$200,000$250,000$300,000$350,000$400,000$450,000$500,000$600,000$700,000$800,000$900,000$1,000,000$1,100,000$1,200,000$1,300,000$1,400,000$1,500,000$1,600,000$1,800,000$1,900,000$2,000,000$2,250,000$2,500,000$2,750,000$3,000,000$3,250,000$3,500,000$3,750,000$4,000,000$4,500,000$5,000,000$6,000,000$8,000,000$10,000,000$15,000,000

Price MaxAny$50,000$100,000$150,000$200,000$250,000$300,000$350,000$400,000$450,000$500,000$600,000$700,000$800,000$900,000$1,000,000$1,100,000$1,200,000$1,300,000$1,400,000$1,500,000$1,600,000$1,800,000$1,900,000$2,000,000$2,250,000$2,500,000$2,750,000$3,000,000$3,250,000$3,500,000$3,750,000$4,000,000$4,500,000$5,000,000$6,000,000$8,000,000$10,000,000$15,000,000

Advanced Options

Property TypeAnyApartmentManufactured HomeSingle Family ResidenceTownhouseTwin Home

School District

Address, MLS# or Keyword

Home SizeAny600 ft2800 ft21,000 ft21,200 ft21,400 ft21,600 ft21,800 ft22,000 ft22,200 ft22,400 ft22,600 ft22,800 ft23,000 ft23,500 ft24,000 ft24,500 ft25,000 ft25,500 ft26,000 ft2

YearAny2024+2023+2022+2021+2020+2019+2018+2017+2016+2015+2014+2013+2012+2011+2010+2009+2008+2007+2006+2005+2004+2003+2002+2001+2000+1999+1998+1997+1996+1995+1994+1993+1992+1991+1990+1980+1970+1960+1950+1940+1930+

Distressed

Open House

Location Search Nearby

BedsAny1+2+3+4+5+6+

BathsAny1+2+3+4+5+6+

Price MinAny$500$600$700$800$900$1,000$1,100$1,200$1,300$1,500$1,600$1,700$1,800$1,900$2,000$2,250$2,500$2,750$3,000$3,250$3,500$3,750$4,000$4,500$5,000$5,500$6,000$6,500$7,000$7,500$8,000$8,500$9,000$9,500$10,000

Price MaxAny$500$600$700$800$900$1,000$1,100$1,200$1,300$1,500$1,600$1,700$1,800$1,900$2,000$2,250$2,500$2,750$3,000$3,250$3,500$3,750$4,000$4,500$5,000$5,500$6,000$6,500$7,000$7,500$8,000$8,500$9,000$9,500$10,000

Advanced Options

Property TypeAnyApartmentManufactured HomeSingle Family ResidenceTownhouseTwin Home

School District

Address, MLS# or Keyword

Home SizeAny600 ft2800 ft21,000 ft21,200 ft21,400 ft21,600 ft21,800 ft22,000 ft22,200 ft22,400 ft22,600 ft22,800 ft23,000 ft23,500 ft24,000 ft24,500 ft25,000 ft25,500 ft26,000 ft2

YearAny2024+2023+2022+2021+2020+2019+2018+2017+2016+2015+2014+2013+2012+2011+2010+2009+2008+2007+2006+2005+2004+2003+2002+2001+2000+1999+1998+1997+1996+1995+1994+1993+1992+1991+1990+1980+1970+1960+1950+1940+1930+

Location Search Nearby

Lot SizeAny1+ Acres2+ Acres3+ Acres4+ Acres5+ Acres6+ Acres7+ Acres8+ Acres9+ Acres10+ Acres20+ Acres30+ Acres40+ Acres50+ Acres

Price MinAny$50,000$100,000$150,000$200,000$250,000$300,000$350,000$400,000$450,000$500,000$600,000$700,000$800,000$900,000$1,000,000$1,100,000$1,200,000$1,300,000$1,400,000$1,500,000$1,600,000$1,800,000$1,900,000$2,000,000$2,250,000$2,500,000$2,750,000$3,000,000$3,250,000$3,500,000$3,750,000$4,000,000$4,500,000$5,000,000$6,000,000$8,000,000$10,000,000$15,000,000

Price MaxAny$50,000$100,000$150,000$200,000$250,000$300,000$350,000$400,000$450,000$500,000$600,000$700,000$800,000$900,000$1,000,000$1,100,000$1,200,000$1,300,000$1,400,000$1,500,000$1,600,000$1,800,000$1,900,000$2,000,000$2,250,000$2,500,000$2,750,000$3,000,000$3,250,000$3,500,000$3,750,000$4,000,000$4,500,000$5,000,000$6,000,000$8,000,000$10,000,000$15,000,000

Advanced Options

Neighborhood

Address, MLS# or Keyword

Location Search Nearby

Price MinAny$50,000$100,000$150,000$200,000$250,000$300,000$350,000$400,000$450,000$500,000$600,000$700,000$800,000$900,000$1,000,000$1,100,000$1,200,000$1,300,000$1,400,000$1,500,000$1,600,000$1,800,000$1,900,000$2,000,000$2,250,000$2,500,000$2,750,000$3,000,000$3,250,000$3,500,000$3,750,000$4,000,000$4,500,000$5,000,000$6,000,000$8,000,000$10,000,000$15,000,000

Price MaxAny$50,000$100,000$150,000$200,000$250,000$300,000$350,000$400,000$450,000$500,000$600,000$700,000$800,000$900,000$1,000,000$1,100,000$1,200,000$1,300,000$1,400,000$1,500,000$1,600,000$1,800,000$1,900,000$2,000,000$2,250,000$2,500,000$2,750,000$3,000,000$3,250,000$3,500,000$3,750,000$4,000,000$4,500,000$5,000,000$6,000,000$8,000,000$10,000,000$15,000,000

Advanced Options

School District

Address, MLS# or Keyword

YearAny2024+2023+2022+2021+2020+2019+2018+2017+2016+2015+2014+2013+2012+2011+2010+2009+2008+2007+2006+2005+2004+2003+2002+2001+2000+1999+1998+1997+1996+1995+1994+1993+1992+1991+1990+1980+1970+1960+1950+1940+1930+

Location Search Nearby

Lot SizeAny1+ Acres2+ Acres3+ Acres4+ Acres5+ Acres6+ Acres7+ Acres8+ Acres9+ Acres10+ Acres20+ Acres30+ Acres40+ Acres50+ Acres

Price MinAny$50,000$100,000$150,000$200,000$250,000$300,000$350,000$400,000$450,000$500,000$600,000$700,000$800,000$900,000$1,000,000$1,100,000$1,200,000$1,300,000$1,400,000$1,500,000$1,600,000$1,800,000$1,900,000$2,000,000$2,250,000$2,500,000$2,750,000$3,000,000$3,250,000$3,500,000$3,750,000$4,000,000$4,500,000$5,000,000$6,000,000$8,000,000$10,000,000$15,000,000

Price MaxAny$50,000$100,000$150,000$200,000$250,000$300,000$350,000$400,000$450,000$500,000$600,000$700,000$800,000$900,000$1,000,000$1,100,000$1,200,000$1,300,000$1,400,000$1,500,000$1,600,000$1,800,000$1,900,000$2,000,000$2,250,000$2,500,000$2,750,000$3,000,000$3,250,000$3,500,000$3,750,000$4,000,000$4,500,000$5,000,000$6,000,000$8,000,000$10,000,000$15,000,000

Advanced Options

Address, MLS# or Keyword

YearAny2024+2023+2022+2021+2020+2019+2018+2017+2016+2015+2014+2013+2012+2011+2010+2009+2008+2007+2006+2005+2004+2003+2002+2001+2000+1999+1998+1997+1996+1995+1994+1993+1992+1991+1990+1980+1970+1960+1950+1940+1930+

View As: Thumbnails List

Sort by: Select Price, Low to High Price, High to Low Newer Listings First Older Listings First Open House Date

6565 E Thomas Road Unit 1041 Scottsdale, AZ 85251

$630,000

3 Beds

2 Baths

1,548 SqFt

Status Active

MLS # 6754945

Property Type Townhouse

Price Type --

Discover your dream condo with both luxury and convenience in the sought-after gated Diamante Community in Scottsdale! This spacious 3-bed, 2-bath home offers 1,548 square feet of open living space with a desirable split floor plan. The living room provides stunning, unobstructed views of Camelback Mountain, perfect for enjoying Arizona's beautiful sunsets. The updated kitchen features stainless steel appliances and granite countertops while the primary suite includes a walk-in closet for ample storage. This unit includes a 2-car attached garage and access to community amenities, including a pool and BBQ areas. Ideally located in between Old Town Scottsdale (2 mi), Camelback Mountain (3 mi), Arcadia (1 mi), the Arizona Biltmore (6 mi), ASU (4 mi), & Sky Harbor International Airport (5 mi)

View Property

26207 N 47th Place Phoenix, AZ 85050

$630,000

4 Beds

2.5 Baths

2,359 SqFt

Status Active

MLS # 6773215

Property Type Single Family Residence

Price Type --

HUGE PRICE REDUCTION!! Seller has drastically reduced the price for an exceptional deal!!! Welcome home to gorgeous Tatum Highlands, located about 4 miles north of Desert Ridge Marketplace! Paradise Valley School District! This home has been maintained and cared for impeccably. Enjoy the views from the walk out balcony off the extra large primary bedroom. Beautiful bamboo wood and tile floors throughout! Laundry room is conveniently located upstairs on same level as the bedrooms! Beautiful double French Doors lead out to the backyard. No home behind you! This cul-de-sac home is ready to be YOUR HOME! A must see!

View Property

10489 E Topaz Circle Scottsdale, AZ 85258

$630,000

2 Beds

2 Baths

2,041 SqFt

Status Active Under Contract

MLS # 6754335

Property Type Single Family Residence

Price Type --

Fantastic location for 55+ adult community patio home in Scottsdale Ranch. Great corner lot, all 1 level, great bones, wonderful opportunity to customize to your preferences for this spacious 2 bedroom plus den home. Community amenities include heated pools, tennis courts and close proximity to Scottsdale Senior Center.

View Property

2583 S Quaintance Street Gilbert, AZ 85295

$630,000

3 Beds

2.5 Baths

1,862 SqFt

Status Active

MLS # 6774352

Property Type Single Family Residence

Price Type --

Gorgeous home in the sought-after Cooley Ranch community! This light & bright home with soaring ceilings offers an open concept floor plan, neutral pallet, wood-look tile flooring, recessed lighting, & sleek modern finishes throughout. The gourmet kitchen boasts granite counters, a gas stovetop, top-notch stainless steel appliances, RO System, & a walk-in pantry. Unwind in your primary retreat boasting an impressive bath with dual vanities & a walk-in shower. Enjoy AZ living in your updated backyard with a covered patio, pavers & synthetic grass. 2-car garage & tankless water heater. You'll love this private community with amenities like biking paths, pool, rec center, sports courts, & more. Prime Gilbert location with quick access to highways, schools, shopping & dining!

View Property

1458 E Black Diamond Drive Gilbert, AZ 85296

$629,999

3 Beds

2.5 Baths

2,185 SqFt

Status Active

MLS # 6780772

Property Type Single Family Residence

Price Type --

Seller Concessions Available! Welcome to 1458 E Black Diamond! This spacious 3 Bed, 3 Bath home includes a 2-car GARAGE and a high VAULTED ceiling in the main living area. Tile and luxury vinyl plank flooring throughout, new carpet upstairs, granite countertops, ceiling fans, NEWER appliances, Washer/Dryer Hookups, and more! Huge master bedroom, bonus room, and FRESH PAINT. Outside - a larger than usual CORNER LOT with a HUGE backyard, fruit trees, and desert landscaping. PAID-OFF SOLAR at close! Nearby - you're within walking distance to multiple parks, Fry's, and Home Depot (3 mins); Gilbert Riparian Reserve, Cosmo Dog Park, Costco (7 mins); Downtown Chandler and San Tan Village (12 mins); golf courses; and have easy access to Loop 202.

View Property

17375 N 10th Street Phoenix, AZ 85022

$629,999

3 Beds

2.5 Baths

2,610 SqFt

Status Active Under Contract

MLS # 6766700

Property Type Single Family Residence

Price Type --

Take pride in residing in this highly upgraded home in Villas at Trellis! Appealing interior boasts clean lines that promote a modern feel! Abundant natural light graces the open floor plan paired w/hardwood flooring, crown moulding, surround sound, & wide sliding glass doors to the back patio. Lovely kitchen provides recessed & pendant lighting, SS appliances, ample cabinetry, subway tile backsplash, a pantry, & a butcher block prep island w/a breakfast bar. Make the flexible den & loft a study or TV area. HUGE main retreat offers plush carpet & an ensuite comprised of two vanities, make-up desk, large shower w/a drying area, & a walk-in closet. Fabulous backyard comes w/a covered patio perfect for relaxing or throwing a barbecue and enough space for fun get-togethers. Don't miss it!

View Property

7833 E Obispo Avenue Mesa, AZ 85212

$629,998

4 Beds

2 Baths

2,532 SqFt

Status Active Under Contract

MLS # 6775630

Property Type Single Family Residence

Price Type --

NEWLY RENOVATED ON A MASSIVE CORNER LOT! Home features 4 beds + a dedicated office space perfect for working from home and 2 full baths. A newly renovated kitchen with modern finishes! Oversized primary bedroom with completely remodeled bathroom! 12,000+ square foot lot with beautiful surrounding views and a sparkling pool! New interior and exterior paint! So many recent upgrades, come see it today because it won't last long!

View Property

21711 E Roundup Way Queen Creek, AZ 85142

$629,995

3 Beds

2.5 Baths

2,510 SqFt

Status Active

MLS # 6702803

Property Type Single Family Residence

Price Type --

Welcome to Light Sky Ranch and the Dominic plan. This single level, 2510 square foot home boasts an open, inviting layout for entertaining. At the heart of the home is a spacious great room that flows into a sunny kitchen with a center island, dual walk-in pantries and an inviting breakfast nook, opening to the covered patio. A luxurious primary suite features an immense walk-in closet and attached bath with double sinks, and a luxurious separate tub and shower. With two additional bedrooms and a teen room, two and a half baths, and a dedicated study, the home offer plenty of space for privacy as well. Outside, a single-car garage and a 2-car garage offer ample storage for vehicles, outdoor gear, and more. With amenities such as a tankless water heater for efficiency and a charming paver driveway, this home seamlessly blends convenience with sophistication.

View Property

21724 E Roundup Way Queen Creek, AZ 85142

$629,995

3 Beds

2.5 Baths

2,510 SqFt

Status Active

MLS # 6708033

Property Type Single Family Residence

Price Type --

Step into Light Sky Ranch and experience the allure of the Dominic plan. This single-level residence spans 2510 square feet and presents an inviting layout ideal for entertaining. The focal point of the home is its expansive great room, seamlessly connected to a sunlit kitchen featuring a central island, dual walk-in pantries, and a welcoming breakfast nook that extends to the covered patio. Retreat to the luxurious primary suite boasting a generous walk-in closet and an attached bath with double sinks and an elegant shower. With two additional bedrooms, a teen room, two and a half baths, and a dedicated study, this home offers ample space for privacy and relaxation. Outside, a single-car garage and a 2-car garage provide abundant storage for vehicles and outdoor equipment. Enhanced with amenities such as a tankless water heater for efficiency and a charming paver driveway, this residence effortlessly blends convenience with sophistication.

View Property

6782 W Firebird Drive Glendale, AZ 85308

$629,995

4 Beds

3 Baths

2,125 SqFt

Status Active

MLS # 6783697

Property Type Single Family Residence

Price Type --

Nestled in the highly sought-after community of Arrowhead Ranch, this beautiful 4 bedroom 3 bath +Den home stands as a true masterpiece of craftsmanship and design. Every inch of the property has been meticulously maintained, showcasing an elegant balance of style and function. Eye-catching custom woodwork graces the interior, from intricate design to handcrafted cabinetry, adding warmth and sophistication to every room. The spacious open floor plan invites natural light to pour in, enhancing the home's inviting ambiance. Outside, the manicured landscaping and peaceful surroundings offer a serene escape while still being close to all the amenities that the Arrowhead area has to offer. **Please check documents tab for the list of upgrades as well as the Home floor-plan. **

View Property

24006 N 171st Drive Surprise, AZ 85387

$629,995

4 Beds

3.5 Baths

2,844 SqFt

Status Active

MLS # 6678786

Property Type Single Family Residence

Price Type --

Welcome Home! Darius plan provides a sophisticated and accommodating plan for livability that checks all the boxes on your wish list. In addition to a lavish owner's suite—with a roomy walk-in closet and attached double-sink bath—this home includes a second owner's suite with an adjacent living room, perfect for multi-generational living. You'll also enjoy a 3-car garage, a study, a great room with a covered patio featuring a multi slide door to bring the outdoor living indoors. Inviting gourmet kitchen with a generous island, dining nook for all entertaining gatherings! Airy 10 ft ceilings ,desired jack and jill bathrooms and so much more! This is a must see!

View Property

21970 E Stirrup Court Queen Creek, AZ 85142

$629,995

3 Beds

2.5 Baths

2,500 SqFt

Status Active

MLS # 6709030

Property Type Single Family Residence

Price Type --

The single-story Cassandra plan showcases an open layout with a multi-sliding glass door in the great room, cozy breakfast nook, a large gourmet kitchen and a 2-car garage. The primary suite is adjacent, and boasts a generous walk-in closet and an attached bath with a large walk-in shower. Two additional bedrooms flank a full bath, and the nearby study.

View Property