Buying a House Mortgages & Foreclosures

Your Dream House What does it look like? What does it look like? How many bedrooms/bathrooms? How many bedrooms/bathrooms? Take into consideration the location, size, color and neighborhood Take into consideration the location, size, color and neighborhood

Mortgages Mortgage = a type of loan for property borrowed from a bank or credit union and paid back within a certain time frame Mortgage = a type of loan for property borrowed from a bank or credit union and paid back within a certain time frame –Making a down payment shows you a better candidate for a mortgage People make mortgage payments every month, but it can take many years to pay off the entire amount—often 30 years. People make mortgage payments every month, but it can take many years to pay off the entire amount—often 30 years. –When taking out a mortgage, banks also charge interest on the money borrowed –a down payment is required to secure a loan, most commonly set at 20% –What’s the reason for a down payment?  Anything less than 20% up front for a down payment means you are a high-risk borrower and will have to pay insurance to protect the banks money

Foreclosures “Creditworthiness” is considered when applying for a mortgage “Creditworthiness” is considered when applying for a mortgage –Having good credit means you will be considered as a good borrower and will be offered better interest rates –Can also impact your ability to rent an apartment –Warning sign for mortgage lenders is a foreclosure Foreclosure = when someone stops making payments on a mortgage and the lender forces the sale of the home to recoup the borrowed money Foreclosure = when someone stops making payments on a mortgage and the lender forces the sale of the home to recoup the borrowed money Some reasons for foreclosure: Some reasons for foreclosure: –Job loss, medical conditions that limit employment, snowballing debt, divorce

Buy It or Pass?

In each scenario, figure out the expenses you need to pay for each house. Determine whether you buy it or pass. In each scenario, figure out the expenses you need to pay for each house. Determine whether you buy it or pass. Why are some mortgages better choices than others? Why are some mortgages better choices than others? How can owning a home contribute to financial security or wealth accumulation? How can owning a home contribute to financial security or wealth accumulation? –If the value of a home increases or decreases over time from the original purchase price, this can influence whether money was made or lost on the investment. What are the costs and benefits of owning a home?