Personal Finance Financing Homes

I. Renting/Owning Owning More stability. More freedom in renovations. Also counts as an asset. Saves money in the long-run. Tax deductions. Renting May have to move frequently. Less responsibility in upkeep. Saves money in the short-run. Assets in more available forms.

I. Renting/Owning Questions to ask before renting: First ask yourself what you most value in a place to live. Are utilities included? How much do they typically cost? What is the parking situation like? How much storage is there? What is the policy for subletting or terminating the lease?

I. Renting/Owning Questions to ask before renting: Have there been any recent renovations? How quickly are repair requests completed? How safe is the neighborhood? Is furniture included? How expensive each month is a furnished apartment? What is the pet policy? What is the guest policy? Is renter’s insurance required? How is rent decided among roommates?

I. Renting/ Owning Before You Buy Get finances in shape. (Eliminate debt) Clear up credit report problems. Get preapproved or prequalified. Be upfront about problems in finances with lenders. Before You Buy

I. Renting/Owning Searching for your Home Search with an open-mind for the home you would like. Find out actual sale prices of similar homes. Research the areas you are interested in. Find the right real estate agent to facilitate a deal. Searching for your Home

I. Renting/Owning Sealing the Deal Negotiate using sales data of other properties. Have the property inspected by your own inspector. (Do not trust the seller’s inspector) Buy title insurance to protect against someone else claiming the legal title to your property. Wait for the mortgage to be approved and to sign the final contract. Sealing the Deal

Mortgages II. Mortgages Very similar to other types of loans; you have a principal and interest to pay. But also must keep in mind the points (fee other than interest paid) you incur when closing a loan.

II. Mortgages Fixed Rate A loan on a piece of real estate where the interest rate remains the same throughout the repayment period. The most commonly taken out. Period between 15 and 30 years and down payments of 5-20%. Adjustable Rate A loan on a piece of real estate with a rate of interest that change throughout the loan repayment period (based on prearranged frequency). Usually starts with fixed rate lower than average, but is followed by many years of unpredictable rates. Ballooning A loan on a piece of real estate that allows for very small payments to be paid for a number of years and then requires the entire remaining balance to be repaid at one. Caters to people who plan on purchasing and then selling homes as investments relatively quickly. Loans repaid within 5 or 7 years.

Deferred Payments II. Mortgages Allows a borrower to delay payments until another period. Depending upon the loan, a borrower may accumulate interest on the loan as they wait to start payments, called “Back Interest.”