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Being a Responsible Home Owner Financial Responsibilities

Being a Responsible Home Owner Financial Responsibilities. Objectives. Discuss Mortgage Responsibilities Explain Refinance Options Determine How Property Taxes are Paid Select Appropriate Homeowners Insurance Explain How to Build Equity. Getting Ahead on Your Loan.

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Being a Responsible Home Owner Financial Responsibilities

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  1. Being a Responsible Home Owner Financial Responsibilities

  2. Objectives • Discuss Mortgage Responsibilities • Explain Refinance Options • Determine How Property Taxes are Paid • Select Appropriate Homeowners Insurance • Explain How to Build Equity

  3. Getting Ahead on Your Loan • Pay more than the minimum monthly payment. • Make payments on a 30-year mortgage as if it were a 15-year term. • Make an additional payment each year. Example: $700 monthly payment = $58.33 extra 12 Months each month *Saves 7 years which equals $58,800.

  4. Refinancing Your Home Paying off a current loan through a new loan on the home. Reasons to consider refinancing: • Benefit from a lower interest rate. • Build equity faster.

  5. Refinancing Your Home Reasons to consider refinancing: • Stabilize payments by changing from an ARM or balloon mortgage to a fixed-rate product.

  6. Refinancing Your Home Reasons to consider refinancing: • Better meet your current and future needs (e.g., better rates, lower payments or more flexible payment options). • Tap into your home equity to pay for major expenses or purchases.

  7. Refinancing Cost Loan Application, Origination or Processing Fee Fee that covers the expenses of preparing mortgage documents, legal service, borrower credit investigation, notary charges, appraisal fee, and any other fees. Title Examination and Insurance Fee to guarantee the title to be good.

  8. Refinancing Costs • Appraisal fee • Survey costs • Homeowners hazard insurance • Lender's attorney's review fees • Home inspection fees • Loan origination fees • Mortgage insurance • Points

  9. Property Taxes • You may qualify to deduct property taxes on your income tax return. • Homeowners are responsible for paying property taxes to local tax office. • Most homeowners pay taxes into a escrow account set up by their lender. State of NM Taxation and Revenue Department (505) 827-0870 http://www.state.nm.us/tax/ptd/ptd_hom1a.htm

  10. Property Taxes • Property taxes help fund the operations of local school systems and local government.

  11. Property Taxes • Amount owed in property taxes is calculated on the property’s assessed value. • The assessed value is determined by the local assessor’s office. • The assessed value is not the same as the appraised value. • Home owners may qualify for certain exemptions.

  12. Homeowners Insurance • Does not pay for routine maintenance or damage resulting from neglect. • Consider your options before making a claim. • Claims are recorded on your CLUE Report. • Claims can lead to higher insurance premiums. • Claims can make the property less attractive to future home buyers due to higher insurance premiums.

  13. Homeowners Insurance Keeping your coverage up-to-date • Inform insurer of alterations, additions and improvements. • Shop around each year and compare rates. • Consider a combined policy – life, car and home insurance.

  14. Filing a Homeowners Claim • Report any crime to the police. 2. Phone your agent or company immediately. 3. Make temporary repairs.

  15. Filing a Homeowners Claim 4. Prepare a list of lost or damaged articles. • If you need to relocate, keep your receipts. • Get claim forms. • Have an adjuster inspect the damage to your home.

  16. Filing a Homeowners Claim New Mexico Department of Insurance P.E.R.A. Building 1120 Paseo de Peralta. PO Box 1269Santa Fe, NM 87504-1269Phone: 505-827-4601Fax: 505-827-4734www.nmprc.state.nm.us/consumers/ crdinsurance.htm

  17. Mortgage Insurance Protects the mortgage holder if the borrower defaults on the loan. Usually required by: • Government secured loans (FHA, VA loans). • Loans for which the amount financed is more than 80% of the property value.

  18. Home Equity Equity is the difference between the market value and the amount owed on the property. Example: Market ValueAmount OwedEquity $110,000 – $65,000 = $45,000 $102,000 – $90,000 = $12,000

  19. How to Build Equity • Paying down your mortgage • Living in a well-maintained neighborhood. • Buying in an area where houses are selling quickly. Equity can decrease due to poor maintenance, crime rates, a slow economy, or a decrease in the housing market.

  20. Home Equity Loans Loans against the equity you have in your home. • Second or junior mortgage • Fixed loans or lines of credit The difference between a home equity loan and a home refinance is that the primary mortgage loan will remain in place. It is not recommended that you turn unsecured debt, such as credit card debt, into debt secured by your house.

  21. Summary • Discussed Mortgage Responsibilities • Explained Refinance Options • Determined How Property Taxes are Paid • Selected Appropriate Homeowners Insurance • Explained How to Build Equity

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