Housing (W!se 8:3) part of Money Management & Financial Planning

What is an advantage of owning a home?

• Not building equity.

  (the amount of money that an owner has already paid off on the house)

• Tax deductibility of mortgage interest.

• Fewer responsibilities

Answer explanation

Please take some time to read the infographic.

Your 3 biggest financial benefits of homeownership are:

1. 1. tax savings

2. 2. appreciation

3. 3. equity

Renting has the advantage of fewer responsibilities.

But it does not build ______ or grow your personal wealth.

• Equity

• monthly payment

• Mortgage

Answer explanation

Equity is the difference between what you owe on your mortgage and what your home is currently worth.

If you owe $150,000 on your mortgage loan and your home is worth $200,000, you have $50,000 of equity in your home.

An agreement between you and a lender that gives the lender the right to take your property if you fail to repay the money you've borrowed plus interest.

• Mortgage

• Real estate agent fee

• Security deposit

What is the relationship between the amount of the down payment and the amount of the monthly mortgage payment?

• The higher the down payment, the higher the mortgage payments

• The higher the down payment, the lower the mortgage payments

Answer explanation

What does a lending institution consider to determine creditworthiness for a mortgage?

In other words, why would a bank choose one application over another?

• Substantial savings for a down payment

• Interest rate

What is an advantage of renting a home?

• Fewer responsibilities

• Tax deductibility of mortgage interest

• Building equity

Answer explanation

Be sure to read the infographic to better understand the benefits of renting vs owning.

What is one cost associated with owning a home?

In other words, if you are a homeowner, what would you have to pay for owning your home?

• Real estate agent fee

• Rent

• Security deposit

• Property taxes

Answer explanation

Take a look at the "hidden costs" of owning a home in the Washington DC area.

Many homeowners are surprised how much maintance can add up to big bills.

What is one advantage of real estate as an investment?

In other words, why is buying real estate (apartment/house/building to rent out) a smart financial decision?

• Learning about the community

• Fewer responsibilities

• Building equity and/or earning money.

Answer explanation

Investing in real estate can be a very wise business choice.

Be sure to do your research and be ready for the responsibilies of being a landlord.

• A ______ mortgage is a home loan where the interest rate is the same for the entire term of the loan.

• Fixed Rate

• Rate of interest

• ARM or variable

Answer explanation

• A fixed-rate mortgage is a home loan with a fixed interest rate for the entire term of the loan.

• Once locked in, the interest rate does not fluctuate with market conditions.

• Borrowers who want predictability and/or who tend to hold property for the long term tend to prefer fixed-rate mortgages.

When does a homeowner have title (full ownership) of his or her home?

• After making the down payment and still have the rest of the mortgage payments.

• After paying off the mortgage and no longer need to pay the bank any money.

• After paying the first mortgage payment and still have the rest of the mortgage payments.

Answer explanation

If you hold/own the TITLE or DEED on a property, you own it.

A property deed is the legal document that officially transfers ownership of the property from its previous owner to its new one.

When you buy a house, the seller (also known as the grantor) will sign this document, deeding the house to you (the grantee).