Unit 1-3 Flashcards
How do prospective homeowners know what they can afford?
Gross income x 28% = allowed housing expense
Gross income x 36% = allowed housing and other debt expense
Which expenses can’t be deducted from a homeowners gross income for income tax purposes?
Interest paid on overdue real estate taxes
What’s covered in basic homeowners insurance?
Lightning damage, Fire, Glass breakage, Wind / hail, Explosion, Riot/civil acts, Damage by aircraft or vehicle, Smoke damage, Vandalism or theft
What are loan discount points?
A unit of measurement used for various loan charges; one point equals 1% of the amount of the loan
What can homeowners deduct from their gross income?
List on page36
- mortgage interest payment on 1st & 2nd homes (below 1,000,000 or 500,000 of filing separately)
- real estate taxes (but not interest paid on overdue taxes!!)
- loan origination fees
- loan discount points
- loan prepayment penalties
What is covered by broad-form insurance?
Falling objects;
Ice, snow or sleet weight;
Collapse of building;
Steam from water heating system or appliances to heat water;
water from plumbing, heating or a/c system;
Damage from short circuits
Coinsurance clause
Requires owner maintain insurance equal to a % (usually 80%) of the replacement cost of the dwelling.
This type of policy allows to ask for full replacement cost w/o deduction of depreciation or wear and tear
Penalty-free IRA withdrawals in regard to buying a home …
- will be subject to income tax
- must be spent in 120 days on down-payment
- for first-time homebuyers
- up to $10,000
What is CLUE?
Database of consumer claims
For insurance companies to access prior claims
How is flood insurance determined?
It covers either property value or mortgage loan amount (up to a limit)
What is the capital gains taxation exclusion?
Up to $250,000 or $500,000 profit on sale if occupied by owner 2 of last five years
(I think we did this)
What is PITI?
It’s the basic costs of owning a home (mortgage).
P-principal (sum of the loan/amt. due)
I - interest
T - taxes
In- insurance
Exemptions from national flood insurance act?
If borrower can prove lowest part of building is above 100 year flood mark
Who is responsible for damage caused by removal of a trade fixture?
Tenant
How are trade fixtures acquired by landlord?
Accession
Means the tenant left them there
