Financial Planning

If your employer provides a 401(k) plan or Health Care and Dependent Care Flexible Spending Accounts (FSAs) and you're not participating, you could be missing out on hundreds - or thousands - of dollars in tax savings each year. That's money that goes right into your pocket instead of Uncle Sam's. Many employers will match a portion of your savings. It's like passing up free money if you don't participate.

How do 401(k) Plans Work?
With a 401(k) plan, money is deducted from your paycheck before taxes are withdrawn, which lowers your taxable income and therefore, lowers your taxes. Some plans allow you to contribute money on an after-tax basis as well. Check with your financial advisor for cases when this might be advantageous in your situation.
PLEASE VIEW YOUR EMPLOYEE HANDBOOK

Choosing a Health Plan
With the countless options available and the complex terminology and paperwork, selecting a health care plan can be overwhelming. There are two basic types of plans: group plans (plans supported by an employer) and individual plans (plans not supported by an employer).
Before choosing a plan, ask yourself:

• How much can you afford to pay monthly for health care?
• Who requires coverage under your plan (just you, or a spouse or dependents as well)?
• How often do you, your spouse, and children visit the doctor?
• Do you want or need dental and vision coverage?
• Do you or your dependents have medical conditions that require specialized care?
• What would happen in the event of an accident or surgery?
• What is the maximum deductible you could afford to pay?

Knowing the answers to these questions can help you understand your health care needs and financial considerations. If you or a family member has a pre-existing health condition, it can be more difficult to get the health coverage you need. As part of the Affordable Care Plan passed in 2010, there is a Pre-Existing Condition Insurance Plan (PCIP) available. You can find out more about it at healthcare.gov.

NAR's Profile of Home Buyers and Sellers indicates 31 as the median age of first-time homebuyers. The median income of first-time homebuyers is currently $64,700, according to the report, with the cost of the purchased home averaging $170,000 and a median down payment of 5 percent.

Deciding whether to rent or own a home is based on lifestyle factors or job stability. Only you can decide whether it is the right time for you to buy or rent.

Renting requires little to no maintenance for living in a rental property, since maintenance is usually the responsibility of the property owner. You may have the flexibility of moving after the end of your lease without hassle or without having to give a reason. Please discuss moving with your landlord prior to relocating. This may give you the ability to move if you do not like the area you are living in or if your job situation requires you to have flexibility in your living arrangements.

Home ownership is definitely a long-term commitment. In addition, you have to think about the upkeep of a home. Everything from cutting the grass to putting on a new roof is your responsibility. The costs can really add up. Then add taxes, water and sewer bills and other expenses and you can get into some sizable payments. So remember, home ownership isn't for everyone.

Below are a few mortgage-closing costs you will encounter while purchasing a home. They are fees charged for services that must be performed to process and close your loan.
Mortgage Closing Costs - Third-Party Fees

• Appraisal
  The appraisal is required to determine the fair market value of the home. A property appraisal is generally required by a lender before loan approval to ensure that the mortgage loan amount is not more than the value of the property. Therefore, an appraiser is needed to make this determination.

• Credit Report
  When you apply for a mortgage, you have to prove that you are capable of paying it back. Lenders will obtain a copy of your credit report to review your borrowing history and determine if they should risk lending you money. This fee goes to the credit-reporting agency like Experian, TransUnion or Equifax.

• Closing Fee
  This fee is paid to the Title Company or attorney for conducting the closing.

• Title Company Title Search or Exam Fee
  This fee is paid to the title company for doing a detailed search of the property records for your home. The title company will look at prior deeds, court records, property and name indexes, and many other documents. This is to ensure that there are no liens or problems associated with your ownership of the property.

• Survey Fee
  A survey of the property may be required to verify boundary lines for your property and to ensure that there is no encroachment on the lot.

• Flood Determination/Life of Loan Coverage
  This cost goes to determining whether your property is located in a federally designated flood zone. If the property is found to be located within a flood zone, you will need to buy flood insurance.

• Courier Fee
  This covers the cost of transporting documents to complete the loan transaction as quickly as possible to avoid paying additional interest on your mortgage loan.

• Title Insurance (Lender’s Policy)
  This covers the costs of assuring the lender that you own the home and the lender’s mortgage is a valid lien.

• Title Insurance (Owner’s Policy)
  This is an insurance policy protecting you in the event someone challenges your ownership of the home.

• Homeowners Insurance

Homeowners Insurance is required to cover possible damages to your home. In the event of a fire or other damage, homeowners will receive this insurance to cover the costs of rebuilding. Your first year’s insurance is often paid at closing.

• Buyer’s Attorney Fee
  This fee is paid to the attorney who prepares and reviews all of the closing documents on your behalf.

• Lender’s Attorney Fee
  This fee is paid to the lender’s attorney for preparing and reviewing all of the closing documents on behalf of the lender.

Fixed rate and adjustable rate mortgages are the two main types of mortgages, but there is a wide variety of other mortgage products available. Below are pros and cons of just a few of the mortgage products you may want to consider.

Type of Mortgage	Pros	Cons
Fixed-rate mortgage	No surprises The interest rate stays the same over the entire term, usually 15, 20 or 30 years.	If interest rates fall, you could be stuck paying a higher rate.
Adjustable-rate (ARM) or variable-rate mortgage	Usually offers a lower initial rate of interest than fixed-rate loans.	After an initial period, rates fluctuate over the life of the loan When interest rates rise, generally so do your loan payments.
FHA (Federal Housing Administration) loan	Allows buyers who may not qualify a home loan to obtain one Low down payment.	The size of your loan may be limited.
VA loan	Guaranteed loans for eligible veterans, active duty personnel and surviving spouses Offers competitive rates, low or no down payments.	The size of your loan may be limited.