Money has been tight this year and you were a month late on a couple of credit card payments. But that won’t hurt your credit score, because you are paying on time now, even if it’s just the minimum. You got a raise at work, which boosts your score. And you don’t plan to apply for new credit anytime soon, so your score doesn’t matter.
None of the above about credit scores is true, but if you believe any of it, you have company. A survey recently released by the Consumer Federation of America shows Americans, continue to harbor numerous such misconceptions.
Just about everybody in this country pays taxes, but nearly 70% of Americans pay less tax just by owning a home. In addition to making an investment in homeownership and watching their equity appreciate year after year, homeowners get the additional benefit of paying lower taxes.
As a homeowner you can deduct mortgage interest and property taxes when you file your yearly Income Tax Return and itemize those deductions. For example, if you purchase a Franciscus home for $250,000 with a 30-year mortgage at 6.25% interest and your real estate taxes are approximately $2,500 per year, your itemized deductions would be $15,625 for interest, plus the $2,500 for real estate taxes.
Q. Explain the concept of leveraging in real estate investments.
A. Leveraging means being able to make a relatively small investment to purchase a more valuable asset that can appreciate at a higher multiple than the invested cash. For example, say you make a $10,000 cash investment to purchase a $250,000 home and the house appreciates 5% during the first year….that means after one year the home would be worth $262,500 – a gain on the asset of $12,500. Your annual return on your $10,000 investment would be a whopping 125% for one year. By contrast putting the same amount of $10,000 cash in the stock market and posting a similar 5% gain would only net a $500 return on the same investment.
Money has been tight this year and you were a month late on a couple of credit card payments. But that won’t hurt your credit score, because you are paying on time now, even if it’s just the minimum. You got a raise at work, which boosts your score. And you don’t plan to apply for new credit anytime soon, so your score doesn’t matter.
Q. Explain the concept of leveraging in real estate investments. 