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The line graph, immediately above, shows the cumulative difference in costs for the two loans. The period of time is the shorter of the term of the shorter loan or number of years you own the home. |
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The total cost of each loan is graphed above. Usually the longer you intend to hold the loan, the greater the advantage in using a larger down payment due to the fact that you pay less interest over time. A large down payment may be less advantageous, however, if you intend to sell the home, refinance, or pay off the loan in the near future. |
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The graph, immediately above, shows how the after-tax rate on a mortgage loan decreases with an increase in your tax rate. |
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What will my closing costs be... |
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Note that the amount of time which you own a home makes a significant difference. The appreciation rate, your tax bracket, the rate you earn on savings, and the potential maintenance are also very significant factors. |
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The out-of-pocket expenses for each loan are shown above. These include closing costs and monthly payments, but do not include potential tax savings. The longer you intend to hold the loan, the greater the advantage of reducing the interest rate you pay. A refinance may be less advantageous, however, if you intend to sell the home or pay off the loan in the near future. Refinancing may also be less advantageous if you increase the amount of time required to pay off the amount owed, even if you reduce the amount of the monthly payment. |
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Given regular monthly payments, the balance you owe will be 80% of today's appraisal value in approximately 56 months. If then you obtain a new appraisal for the same amount and request the lender to remove the mortgage insurance requirement, you may save $8,613 in mortgage insurance costs. |
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Extra payments towards your loan's principal can substantially decrease the amount of interest you pay over the life of your loan. |
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This chart depicts the value of the home you can afford at different monthly payments. |
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