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.house_f4nehsc_large_large

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

3627 E Bethany Home Road Paradise Valley, AZ 85253

$75,000,000
13 Beds
16 Baths
-- SqFt
Status Active
MLS # 6525456
Property Type Single Family - Detached
Price Type --
Arizona's leading custom home builder, Cullum Homes, is proud to partner and present Arizona's most expensive home to ever be built. Introducing the $75 million Palo Cristi Estate Luxury Properties purchased the land last April and immediately partnered with Cullum Homes with the direction to define a next level of luxury in Paradise Valley. The mandate has been to spare no expense in creating a home that is both functional and captures a wow from every room. Shortly thereafter the team selected Desert Foothills for its landscaping with the same mandate. A mandate that applies to the two adding parcels which are also for sale. SEE MORE FOR DETAILS ABOUT THE HOME ! Owner/Agent The custom home will include the following amenities - 13 bedrooms, 16 bathrooms, eight half-bathrooms, two Spa Locker Rooms, Garage space for 15 cars, four kitchens, four wet bars, two outdoor kitchens, one 2-story office/library, conference room, two bowling lanes, indoor shooting range, golf simulator, movie theater/Metaverse room, spa, one home gym, casino room, recording studio, collector's gallery, two story will be seven bedrooms in the main house with four bedrooms in the conference building, one bedroom in the attached casita and one bedroom in the guard house. The property's Spa will feature two locker rooms, sauna, snow room, Vitality Pools, two massage/treatment rooms. Inside the garages there will be a five-car garage with a car lift down to 9-car collector's garage. 1 car casita garage. Exterior Amenities: -2 pools 1 is the Cinema pool with a waterfall and large cinema screen -Lazy river -Spa -2 Baja Shelves -1 island green for chipping and putting -3 fire pits and 1 outdoor fireplace -2 outdoor kitchens -1 stage -Waterslide -Family game courtyard/outdoor lounge space.

5719 E Starlight Way Paradise Valley, AZ 85253

$50,000,000
6 Beds
8.5 Baths
-- SqFt
Status Active
MLS # 6601366
Property Type Single Family - Detached
Price Type --
Welcome to an architectural masterpiece situated within Paradise Valley's prestigious Cameldale Estates. Positioned thoughtfully on a nearly 3-acre parcel in the northern face of Camelback Mountain to allow sweeping views of Mummy, Phoenix, McDowell, and Four Peaks mountain ranges. Design by world-renowned architects SAOTA, collaborating with local architect Stratton, and earning world recognition press/awards for innovative design and unparalleled beauty. Nearly 17,000 sqft of living will blend seamlessly into desert surroundings while offering every conceivable modern luxury. Chef's kitchen, cinema, gym/spa, resort-style infinity pool, with emphasis on seamless indoor/outdoor living. The modern organic design, coupled with exceptional craftsmanship, elevates it to a league of its own.

5738 N Casa Blanca Drive Paradise Valley, AZ 85253

$40,000,000
6 Beds
13.5 Baths
-- SqFt
Status Active
MLS # 6551905
Property Type Single Family - Detached
Price Type --
New modern custom highest end construction build in Casa Blanca & Wilkinson corridor by Regal American Homes. Extremely private estate with stunning mountain views of Camelback, Praying Monk, & Mummy. This 6 bed, 13.5 bath, 23,417 sqft is for the most discerning buyer. Modern design includes central courtyard, open great room & chef's kitchen w/large back kitchen holding hidden bar, pantry, Costco room, & walk-in cooler & freezer. Split floorplan where primary suite includes separate his and hers: vanity, enclosed toilets, & closets, large walk-in shower, free standing tub, red light room, laundry, safe & private outdoor access. Experience true indoor/outdoor living w/custom pool & spa, golf simulator, sport/pickleball court, outdoor BBQ & fireplace, & new landscaping featuring 2 dog run walking path, garden, mature olive, citrus, oak & oleander trees, turf, irrigation, & exterior lighting. Additional rooms include large private gym w/enclosed massage room, office, kid's lounge/playroom, and art and study rooms. Safe room connects to basement with shooting range, lounge and bar, and recreation barn. Short drive to world class resorts, dining, shopping, Paradise Valley County Club & both Scottsdale & Phoenix Airports.

7292 Exotic Gardens Drive Outside Arizona, CA 00000

$30,000,000
5 Beds
9 Baths
-- SqFt
Status Active
MLS # 6601741
Property Type Single Family - Detached
Price Type --
Discover the luxury of possibility to pursue a passion and the freedom to be inspired set on 78+ acres (2 parcels) of coastal land. This gated estate was designed as the ultimate private retreat located in the romantic resort destination of Cambria. The estate lies at the heart of the pristine central coast. Security, privacy, and ease of helipad access are combined in this well-located estate. The nearest neighbors are state beaches and parks, and large holdings. The estate's acreage is in open pasture, Monterey pine forest, olive groves, and pinot noir vineyard setting. Principal structures of the property include the main residence, manager's residence, reception, office, guest house, staff apartments, and two show garage pavilions/event spaces for a total of 32,500 square feet! 12 bedrooms and 16 baths. The interior of the estate's main residence is gracious showcasing old world craftsmanship. The Great Hall opens to the vineyard view terrace. The Onyx Bar is a focal point for guests convenient to the fully equipped professional kitchen. The family room is a comfortable, centrally located, gathering place, opens to another terrace. The serene sanctuary of the master suite offers luxury amenities. Each guest suite offers a private bath and balcony. The West Wing leads to the home office, theater room, and a self-contained guest suite. This is an estate designed for entertaining from a private wine tasting for two to grand scale gala events. The event halls can be utilized as flexible spaces for a car collection. More than 60 vehicles can be housed in the estate showrooms. The conveniences of Cambria is less than two miles away. Airports and marinas are also nearby. A helipad on the property adds to the transportation options. Long a magnet for artists, musicians, and writers. Cambria is a favorite beach destination for visitors and a nurturing natural haven for her lucky residents. The Central Coast lifestyle has attracted the attention of the national press appearing in many recent 'Best of' lists. The property lies along the edge of Coastal Highway 1 aka Pacific Coast Highway, which has no peer. Its most scenic part begins where the estate's driveway ends, turn north and drive the legendary Big Sur coast. The real value of luxury is not the possessions themselves, but the experiences they make possible. We welcome you to encounter the priceless beauty of what's here, in this place, like no other.

2671 Highway 82 -- Patagonia, AZ 85624

$29,950,000
16 Beds
15 Baths
-- SqFt
Status Active
MLS # 6595615
Property Type Single Family - Detached
Price Type --
This is your opportunity to own the historic Rail X Ranch, set against a landscape that is truly breathtaking! To the West are hypnotic sunsets and to the East is the Coronado National Forest with vistas that seem to go on forever. This is a rare chance to own a piece of Arizona's history. Located at 4,500 feet above sea level temperatures are generally 10 to 15 degrees cooler year-round than in nearby Tucson. This stunning 1739 Acre Ranch Estate features a main residence with casita totaling 11,398 square feet and containing 8 bedrooms, 9 full bath rooms and 3 half baths. The main house was Constructed in 1937 and is nestled in the foothills overlooking a tree lined pond and containing numerous patios and porches to enjoy both sunsets and sunrises. The property also has 2 additional homes for employees or managers as well as 3 apartments for employees or guests. The Ranch features a 1930s barn which serves as a workshop and storage area as well as a steel building which could easily converted to a horse barn. The main compound also includes a large office suite and conference room, the property has everything you need to work from home or to handle ranch operations on site. After decades without hunting, wildlife abounds at the Rail X Ranch, including deer, dove, quail, and even javelina. The birding is exceptional, with more than 260 species documented in the nearby Patagonia Sonoita Creek Preserve. Just South of town, there are myriad opportunities for fishing and boating at Patagonia Lake State Park; and the area is filled with wonderful opportunities for horseback riding and hiking. The Ranch has the added benefit of having an artesian well on the property with Water bubbling up and feeding a transportation ditch to deliver this precious resource throughout the ranch. Combined with 8 wells situated throughout the property the Ranch has a unique and valuable asset in its water resources. To complete the picture, The Rail X is also one of the few ranches in the area which has maintained ownership of the mineral rights for the property. This asset provides land security now and into the future. The Rail X Ranch is truly an iconic and unique part of Arizona's History and Heritage and provides a rustic setting yet with all of the upscale amenities to enjoy and cherish your living environment!

7620 N Red Ledge Drive Paradise Valley, AZ 85253

$29,000,000
6 Beds
8.5 Baths
-- SqFt
Status Active
MLS # 6551951
Property Type Single Family - Detached
Price Type --
A true modern masterpiece for the most discerning buyer. This mountainside estate in the town of Paradise Valley is being designed and built in collaboration with Incline Builders and Architekshon, Inc. The nearly 11.5 acre homesite offers unparalleled views and an extremely unique level of privacy and exclusion within 20 minutes of world class resorts, dining, shopping, Paradise Valley Country Club and both Scottsdale and Phoenix Sky Harbor Airports. The modern design will include a 13,000 sq ft main house and 2500 sq ft guest house. Your dream home awaits with 14 to 20 foot ceilings, large open rooms w/ windows of glass, a gym w/ steam shower & sauna, office, movie theater, wine cellar, 2 pools and 7 car garage.

20958 N 112th Street Scottsdale, AZ 85255

$28,000,000
7 Beds
8 Baths
-- SqFt
Status Active
MLS # 6375239
Property Type Single Family - Detached
Price Type --
Welcome to ''The Aerie'', perched high in the McDowell Mountains in Scottdale's most exclusive community of Silverleaf sits this one of a kind masterpiece with unmatched views of the valley below. Thoughtfully designed by Erik Peterson of PHX Architecture and built with the ultimate in perfection by Paragon Custom Homes into a true work of art, this brand new desert contemporary home is an amazing estate. From the open great room which leads to the designer kitchen and hidden catering kitchen to the thoughtfully designed entertainment zone, and the palatial master wing this home has it all. Embodying a true indoor outdoor lifestyle, entertaining spaces flow to the beautiful outdoors all with amazing views of the valley below. Wait, it gets better... you still have time to make changes to the final finish selections to make it your very own! Developed by DMB Development, Silverleaf is a private guard gated community that is enhanced by tree lined streets, private parks and the most private enclaves of homes in Arizona. At the center of Silverleaf sits the renowned Silverleaf Club which boasts a par 72 Tom Weiskopf designed golf course, dramatic clubhouse, spa and countless other options for experiencing the desert resort lifestyle.

10944 E Whistling Wind Way -- Scottsdale, AZ 85255

$27,500,000
8 Beds
11 Baths
-- SqFt
Status Active
MLS # 6583185
Property Type Single Family - Detached
Price Type --
The epitome of luxury + cutting edge design is this 15,378 sqft spectacular NEW BUILD! A contemporary masterpiece by renowned ARCHITECT BING HU, COMPLETION 12/23, in SILVERLEAF'S UPPER CANYON w/ AMAZING VIEWS! Very rare- this hillside home is on one level including its infinity pool + 11 car garages + 2 bedrm guesthouse + gym: except for a fabulous 2ND MASTER on upper level of main house. Soaring ceilings in the grand foyer + 21 ft great room w/ chalk white floors evoke a sense of awe, while the outdoors beckon you to relax + unwind. The property also features a theatre, 2 offices, 8 bedrms + 11 baths, pickleball court,golf simulator, cold plunge +3000 sqft game/play/car showrm w/ bar + glass wall to outside, below guesthouse. GOLF MEMBERSHIP IS NOW AVAILABLE! Embrace an unparalleled lifestyle where modernity meets luxury!

Sedona AZ 86336

$25,000,000
8 Beds
9 Baths
-- SqFt
Status Active
MLS # 6562659
Property Type Single Family - Detached
Price Type --
Unique opportunity to own over 23 acres as part of Sedona's famous landmark with multi purpose uses which has been an iconic piece of the Sedona community. Current zoning is RS-18 and OC (Oak Creek Heritage-See city Zoning guidelines in documents). Included in eight separate parcels are 3 adjacent lots on OAK CREEK, 2 separate houses each with their own guest house. One residence built in 2007 with 4271 sq. ft. and a 900 sq. ft. guest house. Second residence built in 1997 with 2230 sq. ft. and 805 sq. ft. guest house. Sedona Creative Life Center is a nonprofit 501(c)(3) organization founded in 2000 to celebrate the human spirit and provide an uplifting and nourishing environment for celebrations, spiritually enhancing programs, and personal growth. Their mission is to become a primary source of programs for spiritual growth, and for programs that encourage healing and harmony of the spiritual, mental, emotional and physical body. People of all ages and beliefs are invited to participate in events to discover transformational learning tools and empower their spiritual journey. The center is nestled in twenty-three beautiful secluded acres, just a few minutes from the heart of Sedona, Arizona, a world-renowned spiritual Mecca. Many people who are on a spiritual path travel to Sedona as part of their quest for a higher level of consciousness and understanding. See City of Sedona for all zoning questions.

5823 N Invergordon Road Paradise Valley, AZ 85253

$24,900,000
8 Beds
10 Baths
-- SqFt
Status Active
MLS # 6598304
Property Type Single Family - Detached
Price Type --
One of a kind residence redefining bespoke Arizona living. This compound is a testament to modern organic architecture of a scale never seen in the Valley. Effortlessly live and entertain in the expansive public rooms that all open to the carefully curated outdoor areas. The main suite is enhanced by a cozy library, executive office, oversized luxurious bath & stunning closet resembling a private boutique. Expansive outdoors anchored by an oversized square infinity pool beckoning you to take a refreshing dip. Challenge friends to a game of pickleball as you take in the views of Camelback Mountain. Oversized garages w/8+ spaces plus the ability to add lifts. Full guest house and separate pool house complete this unique property. Come explore before the opportunity slips away!

10719 E Rimrock Drive Scottsdale, AZ 85255

$20,000,000
6 Beds
8 Baths
-- SqFt
Status Active
MLS # 6455254
Property Type Single Family - Detached
Price Type --
Immediate occupancy opportunity! Offering Silverleaf Golf Membership and Furnishings. Warm and welcoming, nestled on a flat pad. Home's motor court, detached guest house, front-and-rear yard, are all accessible without elevation changes. Secondary rooms, second wet bar and additional flex rooms offer views. Perched on McDowell Mountains, offering an exclusive 'front row seat experience' of sprawling and vibrant golf course, twinkling city lights, plus captivating near/far mountain views. Flawlessly crafted; meticulously maintained by valley's renowned luxury home builder, Desert Star Construction. This signature address encompasses of over 9 acres; 13,111 square feet of living space to including 1,789 SF 2 bedroom guest home. SEE MOTION VIDEO LEED certified; with geothermal heating and cooling energy efficiency. Amenities include a baker's prep kitchen, butler's pantry, wine room, 13 limestone fireplaces, plaster walls, custom cabinetry and solid hand-hewn walnut doors. Alfresco amenities include an incredible pool and spa, low maintenance lawn, along with a wealth of lounge and dining spaces. Horseshoe Canyon at Silverleaf is known for its prestige, lower density and highest level of security. This masterpiece exudes pure timeless elegance, privacy, and craftsmanship.

7540 N Red Ledge Drive Paradise Valley, AZ 85253

$19,500,000
5 Beds
7 Baths
-- SqFt
Status Active
MLS # 6477513
Property Type Single Family - Detached
Price Type --
This Modern ''Frank Lloyd Wright Inspired'' Clearwater Hills private estate is being designed and built on the best available view lot of Paradise Valley. The owners, in collaboration with Incline Builders and Architekshon, Inc. have designed a true modern glass and steel masterpiece. On 5.01 unobstructed acres of Phoenix Mountain Preserve with Camelback and Mummy Mountain views, it offers extremely unique elevations, sophistication and manned gated protection while only minutes away of world class resorts, dining, shopping, Paradise Valley Country Club and both Scottsdale and Phoenix Sky Harbor Airports. The modern design will include 11,500 square feet of high ceilings, large open rooms beaming with natural light, his & her offices, a gym, 2 master suites, chef's dream kitchen, sauna, movie theater, wine room, negative edge pool, pool cabana and 5 car garage. A gradual $2M private driveway has been installed.

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