Posted on 5/13/2019 9:46 AM By First Bank
Moving into a new home can be exciting and frightening at the same time. The American Bankers Association suggests considering the following questions when choosing your own home.
How much money do you have saved up?
Start with an evaluation of your financial health. Figure out how much money you have for a down payment or deposit on a rental. Down payments are typically 5 to 20 percent of the price of the home. Security deposits on rentals are usually about one month of rent and more if you have a pet. But, be sure to keep enough in savings for an emergency fund. It’s a good idea to have three to six months of living expenses to cover unexpected costs.
How much debt do you have?
Consider all of your current and expected financial obligations like your car payment and insurance, credit card debt, and student loans. Make sure you will be able to make all the payments in addition to the cost of your new home. Aim to keep total rent or mortgage payments plus utilities to less than 25 to 30 ...
Posted on 10/17/2017 12:47 PM By First Bank
What are some tax considerations associated with selling a vacation home?
If you sell your vacation home and wish to know the tax consequences, you must first determine whether your residence qualifies as a vacation home in the eyes of the IRS. Assuming that it does, you should know how to treat capital gains and losses. You should also know what to do about closing costs.
What is the tax definition of a vacation home?
The tax treatment of your additional residence depends on how often the residence is used for personal purposes relative to the amount of time it is used for rental purposes. From a tax perspective, rental properties with personal use by the owner generally fall into one of four categories:
Personal residence--Typically, this is a residence that is not rented at all or is rented for fewer than 15 days during the year. If it is your primary place of abode, then it is your principal residence.
Vacation home--This is a second residence with a combination of personal and rental use ...
Posted on 10/17/2017 12:30 PM By First Bank
What is it? Maybe you've searched all over for the perfect home and can't find one that you like. Or perhaps you've always wanted a custom-built house that is suited to your individual tastes. Whatever the reason, you've decided to build a home and may have discovered that it is a bit more complicated than buying one that is already built. How to do it Choose a lot The process begins when you purchase a lot to build on. This may not be as easy as it sounds, though. There's a lot to consider. Location: What type of neighborhood do you want to live in? If you have young children, are there other young families around? If you like the peace and quiet of the country, is the lot in a rural area? Grade: Which way does the lot's surface slope and lie? Does the lot lie lower than those surrounding it? If so, there is a good chance you could have drainage problems as water runs off neighboring properties onto yours. Services: Is the lot hooked up to any municipal services? City or town lots ge ...
Posted on 9/14/2017 4:23 PM By First Bank
An old rule of thumb said that you could afford to buy a house that cost between one and a half and two and a half times your annual salary. In reality, there's a lot more to take into consideration. You'll want to know not only how much of a mortgage you qualify for, but also how much you can afford to spend on a home. In order to know how much you can truly afford, you need to take an honest look at your lifestyle and your standard of living, as well as your income and what you choose to spend it on.
Getting to the bottom line
If you have unlimited resources, you can afford to buy whatever home your heart desires. For most of us, though, that's not the case.
Unless you can afford to buy a house outright, you'll probably need to get a mortgage to help you pay for it. So, determining how much house you can afford is often a case of determining how much of a mortgage you can afford.
Start with some simple math: Take your monthly income and subtract all of your non-ho ...
Posted on 9/14/2017 4:20 PM By First Bank
What is it?
If you're like most consumers, homeownership involves the largest financial transaction you'll participate in during your lifetime. As such, it's no wonder that the process of buying or selling a home can be so stressful, frustrating, and, at times, totally confusing. If you want to ensure that you make sound financial decisions and survive the process with your sanity intact, you should first educate yourself about real estate transactions and then engage in careful planning. Your first step should be to ask yourself: "Do I really want to own a home?"
Isn't it always smarter to buy rather than rent?
Many people feel that renting is like throwing your money away, and that you should buy a house as soon as you can. However, this isn't necessarily true. Although there can be many benefits to homeownership, many people find renting more advantageous than buying. Which is better for you? To find out, you'll need to evaluate many nonfinancial and financial fac ...
Posted on 8/31/2017 8:44 AM By First Bank
In tax lingo, your principal residence is the place where you legally reside. It's typically the place where you spend most of your time, but several other factors are also relevant in determining your principal residence. Many of the tax benefits associated with home ownership apply mainly to your principal residence-- different rules apply to second homes and investment properties. Here's what you need to know to make owning a home really pay off at tax time.
Deducting mortgage interest
One of the most important tax benefits that comes with owning a home is the fact that you may be able to deduct any mortgage interest that you pay. If you itemize deductions on Schedule A of your federal income tax return, you can generally deduct the interest that you pay on debt resulting from a loan used to buy, build, or improve your home, provided that the loan is secured by your home. In tax terms, this is referred to as "home acquisition debt." You're able to deduct home acquisition debt o ...
Posted on 8/23/2017 4:09 PM By First Bank
There's no doubt about it--owning a home is an exciting prospect. After all, you've always dreamed of having a place that you could truly call your own. But buying a home can be stressful, especially when you're buying one for the first time. Fortunately, knowing what to expect can make it a lot easier. How much can you afford? According to a general rule of thumb, you can afford a house that costs two and a half times your annual salary. But determining how much you can afford to spend on a house is not quite so simple. Since most people finance their home purchases, buying a house usually means getting a mortgage. So, the amount you can afford to spend on a house is often tied to figuring out how large a mortgage you can afford. To figure this out, you'll need to take into account your gross monthly income, housing expenses, and any long-term debt. There are many real estate and personal finance websites on the Internet that can help you with the calculations. Should you use a real est ...
Posted on 8/23/2017 3:54 PM By First Bank
Owning a home outright is a dream that many Americans share. Having a mortgage can be a huge burden, and paying it off may be the first item on your financial to-do list. But competing with the desire to own your home free and clear is your need to invest for retirement, your child's college education, or some other goal. Putting extra cash toward one of these goals may mean sacrificing another. So how do you choose? Evaluating the opportunity cost Deciding between prepaying your mortgage and investing your extra cash isn't easy, because each option has advantages and disadvantages. But you can start by weighing what you'll gain financially by choosing one option against what you'll give up. In economic terms, this is known as evaluating the opportunity cost. Here's an example. Let's assume that you have a $300,000 balance and 20 years remaining on your 30-year mortgage, and you're paying 6.25% interest. If you were to put an extra $400 toward your mortgage each month, you would sa ...
Posted on 8/8/2017 9:07 AM By First Bank
A majority of Americans (60 percent) agree that while they use online resources for research, they prefer to apply for a mortgage in person, according to a new survey from the American Bankers Association. Seventeen percent said they would prefer to apply for a mortgage online, while 23 percent were unsure.
“Banks invest billions of dollars to offer their customers the latest technology,” said Bob Davis, ABA executive vice president of mortgage markets, financial management and public policy. “But at the end of the day, nothing compares to sitting across the table, face-to-face with a banker when you’re making the single most important investment of your life.”
Consumers also indicated, though, that mobile or online services are important when it comes to obtaining a mortgage or making mortgage payments. Sixty-one percent of respondents consider
mobile and online services very important or somewhat important, while 23 percent said they were not important.&nb ...
Posted on 7/19/2017 2:57 PM By First Bank
By Dawn Laumann, First Bank Home Loan Consultant
Do you have a son, daughter, niece, or nephew that makes up the millennial generation (ages 18-34)? According to the U.S. Census Bureau, millennials make up the largest generation in our nation’s history; shockingly, even larger than baby boomers. As this group continues to secure gainful employment and decides it’s time to enter the home ownership stage of life, their buying power will be significant and impactful.
Research suggests that millennials have chosen to live at home with parents longer than previous generations. Many factors have played into this scenario, including the post-recession employment rate, student-debt ratio, lower wages, and a reduced emphasis on reaching major adulthood milestones, like marriage and home ownership. However, as economic conditions continue to improve and change, most millennials are anticipating a bright future with homeownership just two to five years awa ...
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