homeownership: how to achieve your financial goals
DESCRIPTION
Homeownership: How to Achieve Your Financial Goals. Should You Buy or Rent?. Purchasing Mortgage Down payment Points Additional fees Tax deduction. Should You Buy or Rent?. Renting? No mortgage No down payment First and last plus security Set rent No tax deduction. - PowerPoint PPT PresentationTRANSCRIPT
Homeownership: How to Achieve Your Financial Goals
Should You Buy or Rent?
• Purchasingo Mortgageo Down paymento Pointso Additional feeso Tax deduction
Should You Buy or Rent?
• Renting?o No mortgageo No down paymento First and last plus securityo Set rento No tax deduction
Should You Buy or Rent?
• Insuranceo Homeowner’s or renter’so Liability
• Property taxes
Should You Buy or Rent?
• Feeso Assessmento Associationo Maintenance
• Upkeep and improvements
Should You Buy or Rent?
• Time• Job situation• Family status• Age
Can You Afford It?
• Housing expenses• Down payment• Recurring debt
Can You Afford It?
• Qualifying• Pre-approval• Compare rates
Mortgage 101
• Sources for loans• Types of mortgages
o Fixed rateo Adjustable rateo Hybrids
Mortgage 101
• Points• Mortgage payment
o Principalo Interesto Taxeso Insurance
Tax Advantages of Owning
• Points• Interest• Property taxes• Refinancing write-offs
Tax Advantages of Owning
• Interest on equity loan• Losses• Capital gain exclusion
Tax Consequences of Owning
• Not deductibleo Closing costso Commissionso Insuranceo Dues and fees
Using Equity Wisely
• Equity = value minus owe• Banks loan up to 80%• Interest tax deductible• Best for one-time expenses
Using Equity Wisely
• Equity loanso Provide lump sumo Fixed termo Locked-in rateo Set monthly payment
Using Equity Wisely
• Lines of credito Offer flexibilityo Ideal for irregular expenseso Helpful for higher income familieso Use as neededo Variable rate
Using Equity Wisely
• Avoid creating new debt• Could lose house• Shop for best rates• Read paperwork carefully
Owning Additional Property
• Rental propertyo Steady cash streamo Profit on saleo Tax deduction
• Vacation home
Owning Rental Property
• Various kindso Real estate investment trust o Direct investment
Owning Rental Property
• Selection criteriao Locationo Property conditiono Costs
Owning Rental Property
• Other considerationso Tenantso Rento Lease agreement
Owning Rental Property
• Other considerationso Legal restrictionso Insurance coverageo Maintaining occupancyo Housing market
Owning Rental Property
• Tax aspectso Property taxeso Income taxeso Expense deductiono Recapture depreciationo Capital gain or loss
Owning a Second Home
• Tax aspectso Mortgage interesto Property taxes
• Minimal rentalo Rental income tax freeo Expenses not deductible
Owning a Second Home
• Combined useo Income taxableo Deduct expenses
• Maximum rentalo Qualifies as rental propertyo Deduct more expenses
Owning a Second Home
• Complicated ruleso Repair days don’t counto Friends may count
• Selling the propertyo No capital gains exemption (most)o Principal residence (2/5)?
Thank You!