HomeWorks- Money Management

Financial Planning

Home Equity and Mortgage Refinancing

Home Insurance Taxes

HomeWorks- Money Management

Financial Planning

Works

Hom

e

Financial Responsibility

Keys to success communication compromise commitment

Plan aheadUse credit wisely

Financial Planning

Works

Hom

e

Monthly spending plan

Track spending Balance

Income Expenses

Financial Planning

Works

Hom

e

Behind in paying the bills?

Adjust spending plan

_____ Income _____ Expenses

Use emergency fund

Financial Planning

Works

Hom

e

Behind in paying the bills?

Contact creditors before you miss a payment make an offer put it in writing keep your promise stop using credit

Financial Planning

Works

Hom

e

Emergency funds

Advantages

But how? Direct deposit Use unexpected $ Get extra job Use payments

Surprise expenses

Financial Planning

Works

Hom

e

Financial Planning

What’s in a mortgage payment?

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

First Year Last Year

Insurance

Taxes

Interest

Principal

Works

Hom

e

Private mortgage insurance

Required by lenders when the buyer makes a down payment of

Paid at closing and added to mortgage as part of monthly payment annually

Financial Planning

<20%

Works

Hom

e

Private mortgage insurance

Cost depends on method of payment mortgage term APR amount of down payment

Stop when equity reaches ________

Financial Planning

20%

Works

Hom

e

Financial Planning

Escrow accounts

Money for taxes and insuranceTotal divided by 12 = monthly paymentProblems

payments too _____ payments too _____ sudden increases late payments

Works

Hom

e

Selling your home

Most keep 1st house years

Financial Planning

6Decisions affecting the sale

Loans Home improvements Regulations

Keep records

HomeWorks- Money Management

Home Equity and

Mortgage Refinancing

Works

Hom

e

How much home do you own?

Home Equity and Mortgage Refinancing

Equity

Down payment

Principal repaid

Appreciation

Improvements

Works

Hom

e

Equity is

-

Home Equity and Mortgage Refinancing

Works

Hom

e

Equity =

Home Equity and Mortgage Refinancing

Cash value

Works

Hom

e

After-Purchase Mortgage Options

Home Equity and Mortgage Refinancing

Works

Hom

e

Home equity loans

A line of credit

Home Equity and Mortgage Refinancing

Low interest rate?Tax-deductible interestHome is collateralFees

Sandra McKinnon:

For more information visit the Federal Trade Commission at:

http://www.ftc.gov/bcp/conline/pubs/homes/homequt.htm

Sandra McKinnon:

For more information visit the Federal Trade Commission at:

http://www.ftc.gov/bcp/conline/pubs/homes/homequt.htm

Works

Hom

e

The reverse mortgage

A type of home equity ______

Home Equity and Mortgage Refinancing

loanTrade equity for cash62+ years oldIncome is not a factor Home ownership retained

Sandra McKinnon: For more information visit the Federal Trade Commission at:

http://www.ftc.gov/bcp/conline/pubs/homes/rms.htm

Sandra McKinnon: For more information visit the Federal Trade Commission at:

http://www.ftc.gov/bcp/conline/pubs/homes/rms.htm

Works

Hom

e

The reverse mortgage

Closing costs and feesPublic benefits?Maintenance, taxes and insuranceHome at risk

Home Equity and Mortgage Refinancing

Works

Hom

e

Refinancing your mortgage

Should you? It depends

Costs How long you plan to stay Tax bracket

Home Equity and Mortgage Refinancing

Sandra McKinnon:

For more information visit the Federal Trade Commission at:

http://www.ftc.gov/bcp/conline/pubs/homes/refinanc.htm

or The Mortgage Bankers Association at http://www.mbaa.org/consumer-info/refinance.html

Sandra McKinnon:

For more information visit the Federal Trade Commission at:

http://www.ftc.gov/bcp/conline/pubs/homes/refinanc.htm

or The Mortgage Bankers Association at http://www.mbaa.org/consumer-info/refinance.html

Works

Hom

e

Refinancing your mortgage

Consider another typeShop and compare

Interest and fees Compare APR

Home Equity and Mortgage Refinancing

HomeWorks- Money Management

Taxes

Works

Hom

e

Property taxes

Local officials determine revenue required market value of taxable property assessment level tax rate

Taxes

Works

Hom

e

Property tax example

$50,000

X Assessment Rate of 19%

X Tax Rate of $5.09 per $100 assess

= $483.55

Taxes

Works

Hom

e

How are values assessed?

New

Remodeled

Other

On-site appraisal

Reappraisal

Market change

Taxes

Works

Hom

e

Other info on property taxes

Appeal Pay through escrow or directlyIf you don’t pay

interest and fees can be high house will be seized

Taxes

Works

Hom

e

Income taxes - itemizing

Medical & dental Taxes you paid Interest you paid Charitable gifts

Taxes

Casualty and theft losses

Job expenses

Other miscellaneous

Total Itemized Deductions

Works

Hom

e

Income taxes - standard deduction

SingleHead of HouseholdMarried CoupleMarried Filing

Separately

Taxes

$4,250

$6,250

$7,100

$3,550

HomeWorks- Money Management

Home Insurance

Works

Hom

e

The Step Check-Up

Investigate your current coverage

Determine what you have to lose

Compare coverage to potential loss

Take steps to lower cost

Comparison shop

Home Insurance

Works

Hom

e

Investigate current coverage

Review your present policy to determine: Kind of coverage

Limits

Home Insurance

Works

Hom

e

Property coverage

Two Kinds: Structure

Personal Property

Home Insurance

Works

Hom

e

The structure

Perils

Living expenses?

The 80% rule

Home Insurance

Works

Hom

e

More about the structure

Deductible

Inflation protection

Changes to structure

Replacement value

Home Insurance

Works

Hom

e

Personal property coverage

Normally, maximum is set as a percentage of value of house

Replacement value

Home Insurance

Works

Hom

e

Liability coverage

Liability insurance covers you when you or someone in your family causes a

financial loss to someone else.

Home Insurance

Works

Hom

e

Two types of liability coverage

Personal liability

Medical payments liability

Home Insurance

Works

Hom

e

What do you have to lose?

Home Insurance

Do a household inventory

Works

Hom

e

Doing a household inventory

Only what want/need to replace

Organize by room or category

Clump like items together

Store outside home

Home Insurance

Works

Hom

e

Compare coverage to loss

Home Insurance

Works

Hom

e

Lower your cost

Protect the structure Smoke alarms Alarm system Dead bolts Fire extinguishers Sprinkler system

Home Insurance

Works

Hom

e

Lower your cost even more

Change your lifestyle Lock doors

Sandra McKinnon:

For tips on how to lower your homeowner’s insurance costs visit:

http://www.pueblo.gsa.gov/press/nfcpubs/12ways.txt

Sandra McKinnon:

For tips on how to lower your homeowner’s insurance costs visit:

http://www.pueblo.gsa.gov/press/nfcpubs/12ways.txt

Home Insurance

Store valuables elsewhere

Grow older

Check appliances

Works

Hom

e

Comparison shop

There can be significant differences in

the cost of insurance from one company

to another

Sandra McKinnon:

For tips on how to lower your homeowner’s insurance costs visit:

http://www.pueblo.gsa.gov/press/nfcpubs/12ways.txt

Sandra McKinnon:

For tips on how to lower your homeowner’s insurance costs visit:

http://www.pueblo.gsa.gov/press/nfcpubs/12ways.txt

Home Insurance

Works

Hom

e

Money Management Contributors Carole Bozworth

Consumer & Family Economics Specialist

University Outreach and Extension John Merrill

Professor/Extension Housing Specialist School of Human Ecology University of Wisconsin-Madison

Sandra K. McKinnon Consumer & Family Economics/

Information Technology Specialist

University Outreach and Extension