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Dave Said:

Can you write off all the interest you pay on your mortgage when you do your taxes?

We Answered:

Both are somewhat correct, just saying the same thing in a different way but probably meaning the same thing. The second person has the more complete answer.

Mortgage interest is an itemized deduction, and if you have enough deductions to itemize, then the total of your itemized deductions is subtracted from your income before your taxes are figured. But since otherwise you'd get a standard deduction, and don't get that if you itemize, the only savings to you is the amount that your itemized deductions exceed your standard deduction, times your tax bracket. You take whichever is higher, the standard deduction or your total itemized deductions.

Say you are married, filing a joint return, are in the 25% bracket, and have $15,000 in itemized deductions. Your standard deduction for 2007 would be $10,700 -your itemized deductions are $4300 higher than the standard. Multiply that by .25 - you'd save $1075 by itemizing.

Marie Said:

What can happen if you break your mortgage covenant?

We Answered:

You probably have an Escalator Clause in your Mortgage that allows the lender to raise the interest rate if you rent the property and no longer use it as your primary residence.

Lawrence Said:

What happens once you pay up your mortgage?

We Answered:

Once you have payed off your mortgage you now own your home. The payment booklet goes away and the lien holder goes away. You are now responsible for property taxes, utilities and the upkeep of your home. Eventually you will receive the Deed to this property.

Michael Said:

What happens to your house if your mortgage company files bankruptcy?

We Answered:

If the mortgage holder goes bankrupt you will make your payments as usual. Although they may be sent to the court. Eventually the court will sell off your mortgage to another company and you will pay them each month.
Your home stays your home as long as you can prove you have made your payments (keep your bank records to show your checks have been processed.)

Gene Said:

What fees go into your mortgage payment?

We Answered:

Here are some typical numbers you can expect for a $200,000 home, so your figures will vary for a house costing about half that amount.

Homeowner’s Insurance – typically $3 per $1000 of the loan amount annually, so for a $200,000 home, that’s $600 a year.

Flood Insurance – if you live in a flood plain area, that cost will vary between $150 and $200 annually.

Property Taxes – these figures vary wildly throughout the US. However, a typical average is 1 to 1.5% of the cost of the home per year, so for this example, that’s $167 to $250 per month.

Private Mortgage Insurance – generally, if you borrow the full loan amount and put down less than 20% downpayment, your lender will probably require this insurance (also referred to as “PMI”). For this example, the typical PMI payment would be about $140 to $300 per month.

Association Dues/Condo Fees – most condos do require a monthly condo fee. For this example, estimate $200 to $225 per month for this fee.

Miscellaneous Fees – you never know what will happen when you own a home. A leaky roof, broken water pipe, etc. These unplanned situations can impact your monthly finances. If you plan to budget for this, try to put away about $100 a month, to be on the safe side...consider this a "rainy day" fund.

Totals – all of which is mentioned above for a $200,000 home will add approximately $364 to $614 to your monthly payment, in addition to the mortgage payment, bringing your monthly expenses anywhere between $1500 to $1700 per month (for a 6% mortgage of approximately $200,000 is a payment of about $1200.00 per month).

Talk to a realtor, local real estate agent or Illinois Housing to get estimates on insurance and such in Chicago. Good luck!