Homeownership: How to Achieve Your Financial Goals
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Transcript of Homeownership: How to Achieve Your Financial Goals
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!