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Glossary
After-tax investment return
The rate of return, after taxes, you could receive if you invested your closing costs and down payment instead of purchasing a home. The actual rate of return is largely dependant on the type of investments you select. From January 1970 to December 2004, the average compounded rate of return for the S&P 500, including reinvestment of dividends, was approximately 11.5% per year. During this period, the highest 12-month return was 64%, and the lowest was -39%. Savings accounts at a bank pay as little as 1% or less. It is important to remember that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment.
Annual home insurance
The annual amount you expect to pay in homeowners insurance. This amount is divided by 12 to determine the monthly homeowners insurance included in principal, interest, taxes, and insurance (PITI).
Annual property taxes
The annual amount you expect to pay in property taxes. This amount is divided by 12 to determine the monthly property tax included in principal, interest, taxes, and insurance (PITI).