Homeownership: How to Achieve Your Financial Goals

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Homeownership How to Achieve Your Financial
Goals
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Should You Buy or Rent?

• Purchasing
• Mortgage
• Down payment
• Points
• Additional fees
• Tax deduction

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Should You Buy or Rent?

• Renting?
• No mortgage
• No down payment
• First and last plus security
• Set rent
• No tax deduction

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Should You Buy or Rent?

• Insurance
• Homeowners or renters
• Liability
• Property taxes

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Should You Buy or Rent?

• Fees
• Assessment
• Association
• Maintenance
• Upkeep and improvements

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Should You Buy or Rent?

• Time
• Job situation
• Family status
• Age

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Can You Afford It?

• Housing expenses
• Down payment
• Recurring debt

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Can You Afford It?

• Qualifying
• Pre-approval
• Compare rates

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Mortgage 101

• Sources for loans
• Types of mortgages
• Fixed rate
• Adjustable rate
• Hybrids

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Mortgage 101

• Points
• Mortgage payment
• Principal
• Interest
• Taxes
• Insurance

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Tax Advantages of Owning

• Points
• Interest
• Property taxes
• Refinancing write-offs

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Tax Advantages of Owning

• Interest on equity loan
• Losses
• Capital gain exclusion

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Tax Consequences of Owning

• Not deductible
• Closing costs
• Commissions
• Insurance
• Dues and fees

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Using Equity Wisely

• Equity value minus owe
• Banks loan up to 80
• Interest tax deductible
• Best for one-time expenses

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Using Equity Wisely

• Equity loans
• Provide lump sum
• Fixed term
• Locked-in rate
• Set monthly payment

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Using Equity Wisely

• Lines of credit
• Offer flexibility
• Ideal for irregular expenses
• Helpful for higher income families
• Use as needed
• Variable rate

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Using Equity Wisely

• Avoid creating new debt
• Could lose house
• Shop for best rates
• Read paperwork carefully

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Owning Additional Property

• Rental property
• Steady cash stream
• Profit on sale
• Tax deduction
• Vacation home

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Owning Rental Property

• Various kinds
• Real estate investment trust
• Direct investment

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Owning Rental Property

• Selection criteria
• Location
• Property condition
• Costs

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Owning Rental Property

• Other considerations
• Tenants
• Rent
• Lease agreement

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Owning Rental Property

• Other considerations
• Legal restrictions
• Insurance coverage
• Maintaining occupancy
• Housing market

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Owning Rental Property

• Tax aspects
• Property taxes
• Income taxes
• Expense deduction
• Recapture depreciation
• Capital gain or loss

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Owning a Second Home

• Tax aspects
• Mortgage interest
• Property taxes
• Minimal rental
• Rental income tax free
• Expenses not deductible

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Owning a Second Home

• Combined use
• Income taxable
• Deduct expenses
• Maximum rental
• Qualifies as rental property
• Deduct more expenses

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Owning a Second Home

• Complicated rules
• Repair days dont count
• Friends may count
• Selling the property
• No capital gains exemption (most)
• Principal residence (2/5)?

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Thank You!