The mortgage broker should be able to tell you over the phone how much house you can afford. Many people find that they can afford a higher house payment than a previous rent payment because of the tax advantages of home ownership. Your total monthly payment may include principal, interest, property taxes, hazard insurance, private mortgage insurance and home owners association fees. Principal is the portion of the monthly payment that reduces the total amount that you owe. In the beginning of the loan period the principal portion of the monthly payment will be relatively small, but as time goes by the principal portion will increase.
Interest is the charge for borrowing money.
In the beginning of the loan period, the interest portion of the monthly payment will be relatively high, and as time goes by the interest portion will decrease. If you itemize on your income taxes, all interest is tax deductible . In the beginning of the loan and for many years afterward, you will be eligible for a substantial tax deduction, which will decrease your net monthly payment. Contact a tax expert to see how the payment of interest on a mortgage will affect your income taxes. Property taxes are levied based on the assessed value of your home.