Tax-Smart Strategies to Buying a Home

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Tax-Smart Strategies, Get our Tax-Filing App on Android and iOS - Now available for personal and business tax preparation, Get approved to buy a home, purchase mortgage insurance and protect your family with life insurance.

Powered by: MKG Tax Consultants

MKG Enterprises Corp is revolutionizing the tax industry to tackle the housing affordability crisis to build the next financial technology company with a mission driven purpose to strengthen our community by closing the wealth gap created by systemic disparities in the financial industry.

The goal is to give underprivileged and underbanked families access to consumer credit to be able to affordably finance auto loans, finance solar systems, home improvements, make a down payment on a home, investing and/or pay off debt leveraging their tax refund, bitcoin investments, IRA, 401K, 403B, HSA accounts towards the down payment on a house using a proprietary tax-filing banking as a service best in class mobile app, there are even some benefits: 401K, 403B, IRA loans aren’t taxed as early withdrawal penalty and they have low interest rates.

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Three tax-smart home buying moves: mortgage prequalification vs preapproval and using an IRA to purchase a home.

I. Pre Qualification is an early step in your home buying journey. When you prequalify for a home loan, you’re getting an estimate of what you might be able to borrow, based on information you provide about your finances, as well as a credit check.

Prequalification is also an opportunity to learn about different mortgage options and work with your lender to identify the right fit for your needs and goals.

II. Pre Approval is as close as you can get to confirming your creditworthiness without having a purchase contract in place. You will complete a mortgage application and the lender will verify the information you provide. They’ll also perform a credit check. If you’re pre approved, you’ll receive a preapproval letter, which is an offer (but not a commitment) to lend you a specific amount, good for 90 days.

Find out how much house you can borrow before you start looking – and how you can make the strongest offer possible on the property you choose.

If you’re ready to make your dream of owning a home a reality, you’ve probably already heard that you should consider getting prequalified or preapproved for a mortgage. It’s time to understand exactly what each of those terms means and how they might help you. And when you’re working towards a goal this big, you want every advantage.

III. Using a 401(k) and 403(b) to purchase a home is borrowing from your retirement —this is the more tax favorable option. When you take out a 401(k) or 403(b) loan, you do not incur the early withdrawal penalty, nor do you have to pay income tax on the amount you withdraw up to $10,000 tax free earnings.

But you do have to pay yourself back—that is, you have to put the money back into the account and will pay yourself interest. The interest rate and the other repayment terms are usually designated by your 401(k) plan provider or administrator. Generally, the maximum loan term is five years. However, if you take a loan to buy a principal residence, you may be able to pay it back over a longer period than five years

IRAs

Unlike 401(k)s or 403(b)s IRAs have special provisions for first-time homebuyers—people who haven't owned a primary residence in the last two years, according to the IRS.

First, look to take a distribution from your IRA—if you have one. You may be able to withdraw IRA contributions without penalty due to a qualified financial hardship. You can also withdraw up to $10,000 of earnings tax-free if the money is used for a first-time home purchase.

As a first-time homebuyer, you can take a $10,000 distribution without paying the 10% withdrawal penalty, although that $10,000 would be added to your federal and state income taxes. If you take a distribution larger than $10,000, a 10% penalty would be applied to the additional distribution amount. It also would be added to your income taxes.

Publication 590-B Distributions from Individual Retirement Arrangements (IRAs)

Complete owning a home contact form below:

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Marshawn Govan NLMS ID 1370676

Phone (559) 337-5990

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