The mortgage interest deduction is a positive benefit for homeowners. This itemized deduction allows homeowners to subtract mortgage interest from their taxable income, thereby lowering the amount of taxes they owe. The current maximum mortgage interest deduction is based on a$750,000 mortgage amount....
When it comes time to make your second monthly mortgage payment, interest is calculated on the new, lower balance. The payment would remain the same, but $541.18 would go toward interest and $90.89 would go to principal. This interest reduction would continue until your monthly payments were g...
To compute gross income, firstdeterminehowyou're paid. If you're paid a salary or other annual compensation that is consistent each month, such as a pension, you'll use a straightforward formula to calculate your gross income. But if your wages are calculated on an hourly rate of pay, an...
considerations that could affect your chances of getting a mortgage. Debt-to-income ratio (DTI) is just one such metric that lenders will look at to assess your financial situation. Let’s take a closer look at what the ratio means, how it’s calculated and why it matters for loan ...
Unlike simple interest,compound interestis calculated on both your principal and the accumulated interest—it essentially pays interest on top of interest. Even a small deposit in a savings account with compound interest can grow your money exponentially faster. ...
While your gross annual income is a starting point for financial decisions, your annual take-home pay is the amount available to spend on things like gas, groceries, and your mortgage payment. Understanding the difference between these two terms and how to calculate each number can help you cre...
The “debt-to-income ratio” or “DTI ratio” as it’s known in the mortgage industry, is the way a bank or lender determines what you can afford in the way of a mortgage payment. By dividing all of your monthly liabilities (including the proposed housing payment) by your gross monthly...
If you own real estate, you'll owe property taxes. That's true even after the kids have moved out, and you've paid off the mortgage. You can't avoid property taxes, so it's essential to pay attention to your local tax rate a...
Lenders set your interest rate based on various factors that reflect how risky they think it is to loan you money. For example, you will likely have to pay a higher interest rate if you have a lot of other debts, an irregular income, or a lowcredit score. This means that the cost of...
Another key metric that lenders use to evaluate you for a mortgage is your LTV ratio, which is calculated by dividing the loan amount by the home’s value.A property appraisal determines the property’s value, which might be lower or higher than the seller’s asking price. The LTV ratio ...