1. Chapter 13, 13.3

2. Cost of ownership Mortgage payment (monthly) Property taxes (monthly) Closing costs (one time cost) Points (included in above cost, equal to 1% of principal) Homeowner’s insurance (monthly) Mortgage insurance (monthly, included in mortgage payment. Only applies to government insured loans)

3. Types of mortgages Fixed rate (term is same for length of loan) Adjustable rate, or ARM (rate increases or decreases with economy) Insured mortgage, or FHA (common among first time home buyers, reduces the down payment) VA mortgage (for military veterans) Graduated payment mortgage (payment amounts increase over time) Interest only mortgage (borrowers only pay interest on loan for a period of time)

4. Buying process Know what you can afford (about 2 ½ times your gross annual income) Know what you want (location, turn key property or fixer upper) Use a real estate agent Look for problem areas when touring property (water damage, foul odors, electrical issues) Hire a home inspector Make an offer (usually negotiable) Pay the deposit (earnest money says you’re serious)