- Price of home
- Purchase price of the home you wish to buy.
- Cash on hand
- Cash you have for the down payment and closing costs.
- Interest rate
- The current interest rate you expect to receive on your
mortgage.
- Term in years
- The number of years over which you will repay this loan.
- Property tax rate
- Your property tax rate. 1% for a $100,000 home equals $1,000
per year in property taxes.
- Home insurance rate
- Your homeowner's insurance rate. 0.5% for a $100,000 home
equals $500 per year for homeowner's insurance.
- Loan origination rate
- The percentage the lending institution charges for its
origination fee. 1% for a $100,000 home equals $1,000.
- Points paid
- The total number of points paid to reduce the interest rate of
your mortgage. Each point costs 1% of your mortgage balance.
- Other closing costs
- Estimate of all other closing costs for this loan. This should
include filing fees, appraiser fees and any other miscellaneous
fees paid.
- Association and maintenance fees
- Any association fees you are required to pay per month with the
ownership of this home. Also include any other maintenance costs
you expect to incur with the ownership of this home that you are
not paying while you continue to rent.
- Total for down payment
- Total funds remaining for down payment.
- Mortgage amount
- Total amount of loan.
- Monthly rent payment
- Amount you currently pay for rent per month.
- After-tax investment return
- The rate of return, after taxes, you could receive if you
invested your closing costs and down payment instead of purchasing
a home.
The actual rate of return is largely dependent on the type of
investments you select. From January 1970 to December 2007, the
average compounded rate of return for the S&P 500, including
reinvestment of dividends, was approximately 11.4% per year
(source: www.standardandpoors.com). During this period, the highest
12-month return was 61%, and the lowest was -39%. Savings accounts
at a bank may pay as little as 1% or less.
It is important to remember that future rates of return can't be
predicted with certainty and that investments that pay higher rates
of return are generally subject to higher risk and volatility. The
actual rate of return on investments can vary widely over time,
especially for long-term investments. This includes the potential
loss of principal on your investment. It is not possible to invest
directly in an index and the compounded rate of return noted above
does not reflect sales charges and other fees that funds and/or
investment companies may charge.
- Income tax rate
- Your current marginal income tax rate.
- Expected inflation rate
- What you expect for the average long-term inflation rate. A
common measure of inflation in the U.S. is the Consumer Price Index
(CPI), which has a long-term average of 3.1% annually, from 1925
through 2007. The CPI for 2007 was 2.4%, as reported by the
Minneapolis Federal Reserve. Inflation rate is used to adjust
amounts subject to annual increases. These amounts include rent,
insurance and tax payments.
- Home appreciates at
- Annual appreciation you expect in the home you are
purchasing.
- Future sales commission
- The percent of your home's selling price you expect to pay to a
broker or real estate agent when you sell your home.
- House payment
- Total of principal, interest, taxes and insurance (PITI) paid
per month for your home. Insurance includes Principal Mortgage
Insurance (PMI) and homeowner's insurance.
- Initial tax savings
- The value of the tax deduction you receive on your mortgage's
interest and home's property taxes. For example, if you have $900
in interest and $100 property taxes per month, the value of the tax
deduction would be $250. (At a tax rate of 25%).
- Initial principal payment
- Total of principal paid per month on your mortgage.
- Net house payment
- Your initial house payment minus the value of the tax deduction
and principal payment.
- Net home price
- Net selling price of your home after subtracting any sales
commissions.
- Monthly PI
- Monthly principal and interest payment.
- Monthly PMI
- Monthly cost of Private Mortgage Insurance (PMI). For loans
secured with less than 20% down, PMI is estimated at 0.5% of your
loan balance each year.
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