Actually, while such advice may have held true a generation ago, down payments are no longer required in property purchases. If a buyer is unable to make a down payment, they can roll the down payment into the mortgage, but will be subject to paying mortgage interest (PMI), to protect the bank's investment, which adds an additional $100 to the monthly payment. In addition, a buyer has to consider closing costs, which are costs incident to the purchase of a home, which are not recouped by the buyer. Typically banks require that a portion of the mortgage be immediately returned to them, the formation of an escrow account to cover expenses such as PMI and homeowners insurance, attorney's fees, and fees for the property inspector. Taxes are an additional burden that homeowners must face. Property tax rates can be outrageous, depending on the location, and a person with a $100,000 home can expect to face at least $2,500 a year in property taxes. Taxes are generally paid with the mortgage payment, and such an obligation would bring the monthly payment to about $930. In addition to taxes, a homeowner is responsible for homeowner's insurance, which...
Money paid on mortgage loan interest and for state and local taxes is not subject to federal income taxation, which can dramatically alter a person's tax liability, resulting in a greater take-home salary.Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.
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