1. Purchasing a Home

2. Terms to Know
Closing Costs – fees that are due at the time the purchase is finalized.
Down payment- required amount of cash payment to be made at time of purchase.
Ernest Money –Money that the buyer puts down to show they are interest in the property.

3. Terms to Know
Interest – Money that the lending company charges the buyer for the loan.
Mortgage – a home loan
Principal- the original amount of the loan.
Homeowner’s Insurance – insurance that covers the structure and the contents.

4. Terms to Know
Equity –the difference between the market value and the amount of money owed on the mortgage
Escrow- money held by a third party until a specified time.
Amortization- the gradual elimination of the principal on the loan.

5. Advantages of Home Ownership
Feeling of stability
Independence – can change the dwelling to meet their needs
Investment value – investing money in real estate

6. Advantages of Home Ownership
Good Credit Record – helps one build their credit rating
Tax Advantages – can deduct property taxes and interest on income tax

7. Advantages of Home Ownership
Limited mobility – should be a long term investment – may cost one money if only stay a short time.

8. Disadvantages of Home Ownership
Unexpected Expenses – appliances may need to be bought or replaced
Time spent on maintenance - responsible for all upkeep

9. Purchasing a New Home
Development Homes – built by the developer and have a limited number of floor plans to choose from.

10. Purchasing a New Home
Spec Homes – built by the builder on speculation . The home is built before the buyer is secured. Buyer can not choose the outside decor and some of the interior items

11. Purchasing a New Home
Stock Home Plans – Purchase a floor plan from a book and have a builder build it for you.

12. Purchasing a New Home
Custom-built Home – Architect draws up the plans according to your desires. You own the plans and no one else can use them without your permission.

13. Advantages of a New Home
Clean
In good condition
Modern Appliances
More than one bathroom
Can choose the interior/exterior material and designs
Easier to finance
Low maintenance costs

14. Disadvantages of New Home
Possible cost of landscaping – most likely the back yard.

15. Advantages of Older Home
More space for the money
Greater individual character
Often located in a well established neighborhood
Landscaping is complete

16. Disadvantages of Older Home
Possible cost of repairs – electrical wiring, plumbing and exterior and interior surfaces deteriorate with age.
Possible structural problems - cracks, little or no insulation, inefficient heating and cooling

17. Disadvantages of Older Home
May need a larger down payment
May need to redecorate
May need new landscaping as it has no curb appeal.

18. Home Buying Process
1. Contact a Real Estate Agent or begin the search by oneself by using newspapers, internet, television or driving through neighborhoods.

19. Home Buying Process
2. Evaluate the homes one sees according to what you are looking for. Key rooms buyers look at today are the kitchen and master bathroom.

20. Home Buying Process
3. Make an offer by depositing earnest money. This money is held in trust until the deal is finalized and then applied toward the price. If one decides to back out, the earnest money may be refunded.

21. Home Buying Process
4. Obtain financing – must qualify for a loan to cover the cost. The monthly payments should not be more than 28% of the person(s) gross monthly income. Buyers will have to pay for a credit check to be done. Debt payments for the buyer should be no more than 36% of monthly gross income.

22. Types of Mortgages
Conventional – pays a fixed interest rage for the length of the loan. (15 to 30 years)
Adjustable Rate Mortgage – interest rate changes depending on the current market rate. Every time the rate changes, the monthly payments change.
Graduated Payment Mortgage – payments start out low and increase in the later years of the loan.

23. Home Loans
FHA Loan – insured by the Federal Housing Administration. FHA guarantees the lender that the debt will be paid.
VA Loan – for people who have served in the armed services. Loans are guaranteed by the department of the Veteran Affairs. No down payment is required.

24. Home Loans
Rural Housing Service – helps low to moderate income families buy homes in smaller communities
First Time Buyer Program – Government program that helps people purchase their first home. Features low down payment and easier qualifying.

25. Home Buying Process 5. Have the home inspected. Termites
Radon – naturally occurring gas that causes health problems
Asbestos inspection
Lead testing – especially homes constructed prior to 1970.
General structure such as roof, foundation, plumbing, heating and electrical systems.

26. Home Buying Process
6. Obtain homeowners insurance – property insurance that insures the dwelling and contents against fires, windstorms and other hazards.
It also includes a personal liability coverage that protects you in case someone injuries themselves on your property.

27. Home Buying Process
7. Down payment- must have money for a down payment – usually 5 to 25% of the purchase price. The standard amount today is 20%.

28. Home Buying Process 8. Closing the Deal
Origination fee – fee to the lender to process the mortgage
Cost of Survey – to determine the exact boundaries of the property
Cost of appraisal – estimate the value of the property

29. Home Buying Process
Title Search – investigate the court records to make sure the seller really owns the property
Points – a one time fee charged by the lending company
Attorney fee – to make sure the contract is legal and binding.

30. Home Buying Process Other Costs to the Buyer Moving costs
Utility connections (having them turned on)
Landscaping if not included in the contract with a new home.

31. Congratulations
When all paperwork is signed and down payment & closing costs made, the buyer may take possession of the property.
Your monthly payments will include payment of principal, interest, property taxes and insurance.