Homeownership Financial Insights Quiz

Homeownership and Maintenance Cost Comparison

• Basic repair and maintenance skills are important for homeowners to have, and it is recommended to purchase a variety of basic tool kits including hammers, screwdriver set, tape measure, power drill, and more.
• Big box home improvement and local hardware stores offer free home improvement workshops covering topics like changing furnace filters and basic electrical and plumbing repairs.
• Internet How To videos are great resources for DIY home maintenance, potentially saving hundreds or thousands of dollars in maintenance costs.
• Homebuyers are advised to research the responsibilities of the buyer's real estate agent and the home inspector, ensuring they do not waive their right to limit the inspector's financial liability.
• In areas without rent control, landlords can increase rent within statutory limits, and the timing and communication of rent increases are governed by statute in most states.
• Purchasing a house offers benefits such as predictable and fixed monthly expenses over 30 years, building equity, tax deductions, and appreciation.
• A breakdown of costs associated with a $100,000 mortgage at a 4% interest rate includes a monthly payment of $477.42 and total interest payments of $71,869.51 over the life of the loan.
• Doubling the numbers to reflect current rent of $1,400 per month, a $200,000 mortgage at a 4% interest rate would result in a monthly payment of approximately $954.84, similar to the rental cost of a two-three-bedroom apartment.
• The total interest paid over a 30-year mortgage would be $143,740, with tax deductions for property taxes adding up to approximately $102,000 over 30 years.
• Including the cost of property taxes, homeowners' insurance, maintenance, repairs, and home improvements, the total cost of a house over 30 years would be approximately $645,740, resulting in a monthly payment of $1,794.
• Renters paying $1,400 per month with a 3% annual rent increase will end up paying over $813,596 in total rental payments over a 30-year period, averaging $2,260 per month.
• Homeowners, on the other hand, will pay an average of $1,794 per month, resulting in a total cost of $445,740 over 30 years, making renting 20% more costly than owning a home.

Homeownership and the Impact of Credit on Mortgage Rates

• Homeownership is a significant accomplishment, a solid investment, and a foundation for wealth building, but it comes with substantial responsibilities.
• Homeownership can lead to insurance discounts for home and auto insurance.
• Proper maintenance of the home is crucial to retain its value and ensure safety.
• Taking a homeownership course can provide guidance on the buying process and maintaining a house.
• Homeownership allows for the building of equity and appreciation of the property.
• Equity is the ownership of assets that exceed total liabilities, contributing to wealth.
• A good credit score leads to increased purchasing power and substantial savings, particularly in mortgage interest rates.
• A 20% down payment is typically required to avoid PMI (Private Mortgage Insurance) and reduce mortgage costs.
• Different interest rates significantly impact mortgage payments and total interest paid over the loan term.
• For a $200,000 loan over 30 years, the monthly payment at a 2% interest rate is $739, with a total interest of $66,158.
• Mortgage payments and total interest paid increase substantially with higher interest rates, as illustrated in the provided charts.
• Maintaining an excellent credit score allows for significant savings over the lifetime of a mortgage.