Learn With Mortgage Brokers in Columbia MD: Tax Advantages and Fees

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Buying a home is a major financial endeavor that can turn into a valuable investment or a costly expenditure. Finding your range of affordability means so much more than simply just comparing income to the listing price. There is a long list of factors that affect the cost of owning a home. Some of these can save you money if properly utilized while others can quickly become a burden if not fully understood. Correctly using tax rebates and advantages grants homeowners easy financial relief. Understanding these expenses proves to be just as crucial in reducing how much you are spending. Professional mortgage brokers in Columbia MD should go over these costs with you if prompted but it always helps to know more as a homebuyer. 

Tax Rebates

Tax rebates and deductions are a fantastic way to save money when purchasing a home. There are a variety of available options that have specific credentials needed to qualify. By claiming these advantages on your annual tax returns, you can significantly reduce your financial expenditure. Work with your Columbia mortgage broker to explore all of the tax rebate options that apply to you.

Mortgage Interest Deduction

With a mortgage interest deduction, a homeowner has the ability to deduct the interest they pay on their mortgage every year from their taxes up to the first $1 million of their mortgage debt. In addition to the mortgage interest deduction, there are a variety of options available for first-time homeowners such as grants and down payment assistance programs.

Mortgage Insurance Deduction

New homeowners that earn up to $100,000 annually can deduct their mortgage insurance premiums from their tax returns. There is a reduced deduction amount for those who make from $100,000 to $109,000 however if your annual income is over $109,000 you will not qualify for a mortgage insurance deduction.

Tax-Free Profits

If you are able to sell your home for a profit, your capital gains are safe from taxes if you qualify. The profits gained are tax-free up to $250,000 for those registered as single and up to $500,00 for a married couple. The only catch is that the home you sold must have been your primary residence for 2 out of 5 years before the sale date in order to qualify.

External Expenses

Now let’s take a look at some of the external expenses and fees that come with a mortgage agreement outside of the principal and interest payments.

Property Taxes

The average Maryland property tax rate is 1.06% of your home’s assessed market value and is to be paid monthly. The amount you pay will remain relatively consistent but should always be calculated into your monthly spending. The amount of property tax paid depends on your house’s size, construction type, age, location, and means of use. 

Homeowners Insurance

Homeowners’ Insurance is one of the most important expenses when buying a home. Paying the monthly insurance premiums can become tedious but when disaster strikes you will be more than happy to have your bases covered. Homeowners’ insurance can be used as a valuable asset to leverage certain situations. The levels of homeowners insurance range from HO-1 to HO-8. HO-3 is the most common homeowners insurance used today and has a broad range of coverage. HO-5 is the most comprehensive and second most common for single-family dwellings. The other levels of homeowners insurance are specialized for specific situations and different types of residences such as condominiums and rentals. Be sure to discuss with your Columbia Maryland mortgage broker as to which homeowners insurance is a proper fit for you.   

Other Expenses

When you are planning out your monthly expenses it is important to consider everything possible and allocate financial resources to accommodate. Along with mortgage payments, homeowners insurance and property taxes are the day-to-day expenses of owning a home. Homeowners associations could charge a monthly fee. Routine maintenance is key to maintaining the property in order to avoid letting small problems grow into costly repairs. Monthly utilities such as HVAC, water, and electricity should all be considered with room for error left due to the fluctuating nature of these bills.

Work With Expert Mortgage Brokers in Columbia MD

Having someone in your corner who is educated in mortgage brokering proves to be an invaluable asset that will guide you through a beneficial and successful homebuying experience. By using all of the available advantages such as tax deductions and rebates, home buyers can save large sums of money and in turn make the whole process much more affordable. At Federal Hill Mortgage we work closely with our clients to ensure that money is saved wherever applicable.  Contact us to get in touch with Maryland’s top mortgage broker service, Federal Hill Mortgage.

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Federal Hill Mortgage

The Federal Hill Mortgage Team is here to supply you with all the information you need to shop for a mortgage that's right for you.