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Assess Your Finances

What you can deduct
- Home mortgage interest
- All real estate taxes on any property you own
- Your state income taxes
- Charitable contributions
- Medical and dental expenses that exceed 7.5% of your income
- Personal property taxes if your state has them
- Certain moving expenses.
At the start of a mortgage repayment schedule, when the debt hasn't been reduced yet, almost all of your monthly payment goes toward interest. A bit goes toward reducing principal (the amount borrowed), so that the next month you're borrowing a bit less, and owe a little less interest. That allows more of your next payment to go toward reducing principal. However, this process is very slow in the beginning and the interest portion remains high for many years.

Between the mortgage interest and the property tax deductions, you can figure that the government is shouldering part of your monthly mortgage payment - 28% of it, in fact, if that's your tax bracket. Your state income tax bracket can also be added to that, before you calculate how much you save on income tax as a homeowner.

Further Information:
Planning Your Home Purchase
Checking Your Credit Rating
Pre-qualification and Pre-approval on a Mortgage
Becoming an Educated Buyer: Research Neighbourhoods
Becoming an Educated Buyer: Your List of Home Requirements
Assess Your Finances: Checklist
Assess Your Finances: Compare buying with renting
Assess Your Finances: Calculating the cost of homeownership
Assess Your Finances: What you can deduct
Interest Rates and How They Change
Closing Costs
Other Closing Costs
Figuring Out Your Monthly Income
Figuring Out Your Monthly Debt
Amount of Your Down Payment
How Much House Can You Afford?

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