Personal Finance. Advantages of Buying a Home  Privacy & Freedom  It is a good investment The value of a home tends to appreciate.  Tax Advantages.

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Presentation transcript:

Personal Finance

Advantages of Buying a Home  Privacy & Freedom  It is a good investment The value of a home tends to appreciate.  Tax Advantages You can deduct the interest you pay on your home loan from your income. When you sell your home, most of the profit is usually tax free.

The Added Costs of Buying a Home  The Down Payment The average cost of a home in the U.S. is around 250,000 dollars. ○ Most mortgage lenders require at least a 10 to 30 percent down payment. ○ That means saving up to 25,000 to 50,000 dollars!  Monthly costs All utilities Mortgage & yearly real estate tax  Decreased mobility

Obtaining Financing  When buying a home, most people borrow money in the form of a mortgage.  The home you buy is a collateral, meaning that if you fail to repay your loan than the bank can repossess it.  Foreclosure is the process that the lender can use to take possession of the house and sell it.  When you are ready to buy, it is a good idea to contact at least mortgage lenders to find the best rate. A good credit score can save you thousands of dollars on a mortgage. A bad credit score can keep you from getting a mortgage all together.

Mortgage Rates  In general, interest rates on mortgages are influenced by economic conditions  The amount of your monthly mortgage payment is affected by 4 factors: 1. The price of the home 2. The amount of the down payment 3. The interest rate of the loan 4. The length of the loan

Two types of Mortgages Fixed-Rate MortgageAdjustable Rate Mortgage  A loan whose interest rate does not change.  If the initial rate of the loan is 8.5% then you will pay 8.5% for the life of the loan.  If you plan on staying in one place for more than five years then this is the best option  The interest rate of this loan might increase or decrease over the course of the life of the loan.  Many times it depends on economic conditions.  Most ARMs will have really low initial rates but increase as the length of the loan increases.  If you do not plan on staying in your home for an extended time period than this might be the best option.

Tips for Buying a Home  Location: Housing prices are more stable in safe neighborhoods.  Negotiate before accepting an offer.  Schedule an inspection.  Have a lawyer review your papers.