- 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 can 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.
- Total closing costs
- Total upfront costs to close your loan. This
is the sum of the loan origination fee, amount paid for points and
other closing costs.
- Total for down payment
- Total funds remaining for down payment.
- Mortgage amount
- Total amount of loan.
- Investment return
- The rate of return you could receive if you
invested your closing costs and down payment instead of purchasing
a home.
The actual rate of return is largely dependant on the type of investments
you select. From January 1970 to December 2003, the average compounded
rate of return for the S&P 500, including reinvestment of dividends,
was approximately 11.7% per year. During this period, the highest
12-month return was 64%, and the lowest was -39%. Savings accounts
at a bank 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 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.
- Monthly rent payment
- Amount you currently pay for rent per month.
- Income tax rate
- Your current marginal income tax rate.
- Expected inflation rate
- What you expect for the average long-term
inflation rate. This has been calculated by the Consumer Price Index
from 1925 to 2002 to be 3.1%. 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.
- Principal payment
- Total of principal paid per month on your
mortgage.
- 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 $280. (At a tax rate of 28%).
- Net house payment
- Your 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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