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From monthly archives: August 2017

We are pleased to present below all posts archived in 'August 2017'. If you still can't find what you are looking for, try using the search box.

Tax Benefits of Home Ownership

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 ...

Buying a Home

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 u ...

Should You Pay Off Your Mortgage or Invest?

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 ...

Survey: Mortgage Borrowers Want Both Technology and In-Person Services

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 ...

Refinancing and Home Equity Loans: Tax Considerations

What are the tax considerations associated with refinancing and home equity loans? Generally, interest paid on loans to acquire an existing home or to construct a new home is tax deductible ,with certain limitations.  In addition, interest paid on refinanced mortgages is deductible (also subject to certain limitations). Can you deduct interest paid on refinanced mortgages? If you refinance the current principal balance owed on a mortgage secured by your primary or secondary residence (a no-cash-out refinance), interest on the refinanced loan will be deductible to the same extent as was the interest on the old loan. If, however, the refinanced loan is for more than you owed on the old loan (a cash-out refinance), deductibility of interest on the amount of the loan that exceeds the principal balance of the old loan is determined as follows:  If you use the excess amount to buy, build, or substantially improve your first or second residence, the excess amount is treated ...

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All First Bank blog information and content is strictly informational. It is not intended to be specific investment, tax, or legal advice. If you need detailed financial, investment, or tax advice, please contact a First Bank qualified professional. Please note, First Bank occasionally shares third-party content we find to be relevant and helpful to our audiences.