Should Both Parents Work Outside the Home?

The Leave It To Beaver Family is now just a memory. Many of us grew up in an era where it was the exception to the rule if both a mother and father in a family were working outside the home. When a new baby arrives, the question of whether or not it makes sense for one spouse to stay home becomes paramount. This is not an easy decision, and every family has its own unique set of circumstances to work through on this question. This article will address the issue of whether it makes financial sense for both parents to be working outside the home.

1. The added cost of a two-income lifestyle

Before getting to the point of doing an analysis of the related tax issues and other expenses directly related to earning more money, let start by considering the additional cost of the two income lifestyle.

• Transportation costs – The cost of operating a second vehicle for commuting purposes. Most likely it will cost about.50 per mile for your commute to work. This figure includes fuel, maintenance, and depreciation. This does not account for other miscellaneous expenses such as parking fees and tolls, and no, the cost of commuting is not deductible on your taxes.
• Clothing – Depending on the type of work, there may be substantial ongoing expenses for uniforms or professional clothing.
• Tools of your trade – This may include an additional laptop computer or other required tools or technology needed to perform your employment duties.
• Eating away from home – It is likely that there will be a substantial increase in eating at restaurants both during the work day as well as after work; after all, there is no one home putting in the pot roast at 1 for dinner at 5.

2. The tax advantages of a two-income lifestyle

Without a doubt, the largest single expense that comes into play would be the cost of childcare. If your children are older, this may not be a consideration. Many parents don’t feel comfortable with the latch-key kid concept and will opt for some form of after-care for their school age children.

Individuals that pay for day care expenses for their children may be eligible for a federal tax credit of up to 35% percent of the cost of day care. To qualify for the child care credit, you must have a dependent child age 12 or younger. You calculate your tax credit on Form 2441 (PDF) and Instructions for Form 2441.

So, there is a little help here from Uncle Sam, but it is not likely a real game-changer.

3. Financial calculators that may help you make a good decision

Don’t forget that a second income also means additional income taxes. This can get somewhat complicated especially when considering the possibility of more income moving you into a higher marginal tax bracket, state tax considerations, etc… The good news is that there are financial calculators to crunch these numbers for you.

Stay At Home Calculator from – Very comprehensive but does not appear to factor in the federal childcare tax credit.

Adding A Second Income Calculator From MSN – Appears to take tax rates into account but it is unclear whether or not the federal childcare tax credit is comprehensively included.

Ultimately, it may be well worth it to pay a consultation fee to discuss your entire financial picture with an accountant or financial planner.

4. Working from home; the answer?

Starting your own home-based business or telecommuting may be the best answer. Many companies actually encourage telecommuting and freelancing arrangements for employees that need to work from home.

Get Your Hands on that Refinance Home – Calculate!

You always hear them talk about it – property value is on a constant rise. This given, you are aware that your home is now more valuable than before. You are aware that it is now mortgaged under its current value.

Available Options

Now you want to know its estimated value. But you don’t know where to go and from what you heard, an appraisal analysis is generally expensive. Now you’re wondering if there is any other option left.

Yes, there is. You can try a comparative market analysis. It’s much cheaper than an appraisal. Now what’s the difference between the two?

The Difference between an Appraisal and a Comparative Market Analysis

An appraisal is a calculation of your home’s value at a specific time and is done by a certified appraiser. When determining your home’s approximate value, the appraiser takes into account the land area in square footage, your home’s design, the quality of construction, and the location of your home. The appraiser also considers the neighborhood, the availability of transportation, and schools and commercial areas, as well as the landscaping and view.

A comparative market analysis, on the other hand, is a more informal estimate of the market value of your home. A real estate agent performs his analysis by simply using the sales of other comparable homes in the vicinity as a point of comparison.

You Still Have Another Option

But wait, you still have another option. Yet again, you can rely on the Internet for this. It’s called a Home Value Calculator. This tool is only good for informal estimations, though. Your certified appraiser and real estate broker are still more reliable in terms of getting the estimated value of your home.

What do you need these estimations for, anyway? Are you interested in getting a refinance home? If so, then you must try a mortgage calculator. This tool will help you figure out the amount of monthly payments you will have to pay for with your refinance home.

The tool also includes in its equation the Private Mortgage Insurance or PMI for a refinance home with less than 20% as down payment. Also included are the town property taxes and their consequent effect on your monthly payments.

Do not Take Your Refinance Home for Granted

Now that you have started to look into the matter, why don’t you delve into it even further? There are still a lot that you need to learn, like which is better – a fixed rate mortgage loan or an adjustable mortgage loan? And would it pay to have lower interest rates and monthly payments if it would mean extended mortgage terms? Also, would it be wise to consolidate your numerous debts into your refinance home? Would it be worth the risk of using your home as collateral?

Your refinance home is definitely not a simple matter and is not something you can take for granted. After all, you have your most valuable asset on the line. So go on ahead and investigate before making a decision.

Refinance Home Loan and Adjustable Rate Mortgage – What’s In It For You?

Your refinance home loan is a new loan using once again the subject property as collateral. But what if you have seen the possibility of relocating to another state because a child is going to college soon? What are your options?

Opting for an Adjustable Rate Mortgage

With the likely prospect of relocating in a few years, the option for an adjustable rate mortgage (ARM) for your refinance home loan is a smart one. For the last three or four years of your stay in your house, you will be paying low interest rates on your new loan before rates take an upward swing.

Commonly, people shy away from an ARM for their refinance home loan because of an unpredictable market. But here’s the advantages you’ll get from an ARM:

1. Low interest rates for the first few years.
2. Time to plan for the future.

3. More cash flow because of lower monthly payments.

4. When rates fall, you don’t need to refinance companies will ensure you get the low rates.

However, before you go for an ARM, you only have to answer one very important question: Can you afford to continue paying the loan in case the rates soar? If the answer is yes, then, by all means, go for it.

What You Need To Know

The interest rate for your refinance home loan on ARM changes over time. The first interest rate is set below the market standard comparable to a fixed rate loan. Unlike the fixed rate mortgage, the ARM rates rises and beyond three years or seven years depending on your loan contract, the rates exceed those of the fixed rate mortgage.

This is the reason why this is attractive for those who are planning to stay in the house for a few years. By the time the interest of your refinance home loan rises ,you can sell your home after working it out with your lender and checking your mortgage pay-off.

In selling your home, calculate your estimated expenses. Deduct the mortgage payoff from the fair market value of your home and subtract the charges to sell from the remaining balance to arrive at an estimate of proceeds due to you at the closing.

Here is the list of expenses to be incurred when you’re going to sell your home:

1. Commission of the real estate agency.
2. Advertising costs if you’re selling on your own.

3. Attorneys fees for the closing if you’re selling on your own.

4. Excise tax for the transaction.

5. Homeowner Association fees and property taxes and other fees.

6. Inspections and surveys.

When all is said and done, the amount paid to you at the closing should enable you to pay for a new home. If not, then you have to pursue a new loan. This is why you should get pre-approved for another loan before you sell your house. A ready house on the block makes it easier for you to calculate the amount of the new refinance home loan you will need.