Steps & Finances Involved in Buying a Home cont. Step #2: Determining Preference What else to consider besides financial readiness and location when shopping for a home: Types of housing desired: 1. Single-family dwellings: houses detached from other units 2. Muti-units: duplexes and townhouses 3. Condominiums: ind. owned units in a building with several other units (homeowner’s fees – monthly fees) 4. Cooperative housing (co-ops): apartments 5. Manufactured housing: units assembled in a factory

Steps & Finances Involved in Buying a Home cont. Step #2: Determining Preference cont. Commuting distance Service availability (water, sewer, roads, cable tv) Taxes Size and quality Zoning laws and covenants

Steps & Finances Involved in Buying a Home cont. Step #3: Finding a Home, Making an Offer Real Estate Agent or Broker – offers services to buyers and sellers of property – 6% commission – Show homes, present an offer to the seller, negotiate prices, assist in the obtaining of financing, and represent the buyer at closing Buyer’s Agent: represents the buyer not the seller Home Warranty: provides additional protection to the buyer

Steps & Finances Involved in Buying a Home cont. Step #3: Finding a Home, Making an Offer cont. Making an Offer – Binder or earnest money: security deposit by the buyer as evidence of a serious offer – Escrow: earnest money held by the mortgage lender until closing – Contract: terms and conditions are outlined, 1st legal document between the buyer and seller

Steps & Finances Involved in Buying a Home cont. Step #4: Getting Financing Less than 10% of home buyers pay cash for a home. The higher the down payment the lower the amt. of the loan and subsequently the lower the monthly payment. Title: legal right of property ownership, transferred from the seller to the buyer Abstract: written history of property’s ownership Deed: document that transfers property ownership

Steps & Finances Involved in Buying a Home cont. Step #5: The Closing Closing – meeting in which real estate is transferred from seller to buyer (settlement) Fees are associated w/ the closing, documents are signed, and the title is passed Mortgage insurance will be required if the buyer makes a down payment of less than 20% Points – type of closing cost, fees paid to the lender at the closing (1% of total loan) Closing occurs in the office of the mortgage lender or attorney