1. Buying

2. 2/3 of people are homeowners Why?
Freedom
Less likely to be evicted
No dependence on others
Financial advantages
inflation

3. equity Money value of the house beyond what is owed on the house
Renters cannot build equity
Homeowners build equity when they sale or refinance
Tax advantages

4. Buying a home is complex, time consuming, and costly
Cost more than rent, at least for the first few years.
Property taxes, homeowners insurance, utilities and maintenance

5. Foreclosure
Legal proceeding in which a lending firm takes possession of the property.

6. Price Buying a house is not an easy task
Income, savings, and debts all contribute to how much you can spend on a home
Credit score

7. Estimating what you can afford
2.5 times your gross income
Gross income is what you make before taxes are taken out
Example: then you can afford a home.
Ballpark figure

8. Down payment
Usually at least 5 percent down

9. Housing to Income ration
Monthly housing cost should not exceed 28 percent of your gross income.
Mortgage, property taxes, utilities, repairs, fees

10. Debt to Income Ration
Monthly housing cost plus long term debt should not total more than 36 percent of your monthly gross income.
Long term debts. Take more than 10 months to pay off

11. To build or buy? Building a home
If you choose to build a home you first have a lot then a home
1.) choose a region, community, neighborhood site
2.) find a house that fits your lifestyle
3) Select a contractor( Bid)
4.) obtain the money ( loan, appraisal value)
First loan will be for the construction second a long term long

12. Buying a home Less time Move in or close soon Visualization
Preowned- extra stuff
No house is perfect, know your flaws

13. Things to look for A cracked foundation
Rotten or sagging roofs, walls or support, major construction flaws
Insect damage
Less serious conditions can be repaired if you want to spend the time, money and effort ex..

14. Inspector will judge the construction
Appraiser will give you an expert estimate of the quality of the property.

15. Locating a home
Real estates
Internet
Newspapers
ride throughs

16. Steps in buying a home Contract called agreement to sale
Specific terms and agreements
Should include
Real estate and its legal location, purchase price, down payment, possession dat
Specific terms must be spelled out. Example keeping the carpet

17. Earnest Money
Deposit the potential buyer plans to pay to show he or she is serious about buying the house.
Held until deal goes through, then put toward the house

18. Abstract of title
Have to make sure seller is legal.
Public records

19. Survey Professional survey is often required
Assures the lender of the home that the building is actually located where it says it is

20. Securing the mortgage
Pledge of the property that a borrower gives to a lender as a security for the payment of a debt
Lender is usually a bank

21. For years standard home morgtages where long term, fixed rate which means usually written for years with the interest rate and monthly payments

22. Conventional Morgtages: two party contract between a borrower and a lending firm. Government does not insure this type of loan
FHA- 3 party contracts, includes borrower, lending firm and the federal housing administration. FHA is a part of HUD( housing and urban development) FHA does not make loans but insures the loan
VA: generally cost less than other common types of fixed morgtages. 3 party loans. Must be a veteran and insured by the veterans administration.
No down payment but the lender may

23. Arm rate: adjustable rate mortgages
Arm rate: adjustable rate mortgages. Interest rates periodically go up or down based on national interest rate index.
Monthly payments may increase or decrease.
Some have caps
Renegotiable rate mortgages: interest and monthly payment may be fixed for a certain amount of time. When time expires rates will go with current rate of interest.

24. Closing cost
Fes and charges for settling the legal and financial matters must be paid. This is called closing cost.
Closing cost include: recording fees for the deed and mortgages, attorneys fees, abstract title and title insurance, apprasial, survey charges, escrow fees, points( interest paid) orgination fee( paid to the lender for processing the loan)
Miscellaneous fees, flood insurance, termite inspection, credit report, tax services, appliation fees
Commission

25. Title and the Deed
Title document of the rights of ownerships and possession of property.
Deed describes the property being sold

26. Insurance
Protects
Fires and other hazards
Take a look at page 148

27. Refinancing Lowers monthly payments Lower interest rates
Home improvements
College tuition
Things to ask
Prepayment penalty
Title search, appraisal, survey, how much will it cost
Who pays the recording fees
Monthly payments
How many months