1 / 32

Home Buying

Home Buying. Topics Include:. Are you ready to buy? What can you afford? Lenders and Loans Selecting a Real Estate Agent Negotiating the Deal Closing Costs and Closing Reducing Payback Time Homeowner’s Insurance. Are you ready to buy? Renting versus Buying. Rent. Buy.

verity
Télécharger la présentation

Home Buying

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Home Buying

  2. Topics Include: • Are you ready to buy? • What can you afford? • Lenders and Loans • Selecting a Real Estate Agent • Negotiating the Deal • Closing Costs and Closing • Reducing Payback Time • Homeowner’s Insurance

  3. Are you ready to buy?Renting versus Buying Rent Buy • Ready for stability and sense of community • Have cash for a larger initial investment • Provides a tax advantage • Want your equity to grow • Don’t mind being a landlord • Don’t mind more variable expenses • Like fix your own home • Want to remodel and/or personalize • Move a lot • Unfamiliar with area • Low on cash • Can’t or won’t maintain • Prefer fixed expenses • Don’t want to risk losing equity • Okay with not personalizing • Don’t need tax advantage of home ownership • Don’t want to be a landlord

  4. What type of house? • Condo • Duplex • Single family • New construction • One story or two • Older home with character

  5. Location, location, location! • Distance to work • School system • Low crime area • City, suburb, country • Near mass transit • Near child care • Distance to schools, libraries, parks, shopping, highways, etc.

  6. Needs versus Wants

  7. What can you afford? • Prepare, or update, your financial plan or budget • Reduce debt first page of the Financial planning worksheet Calculating your Debt-to-income Handout

  8. Credit Scores • 35% - Your Payment History • 30% - Amounts You Owe • 15% - Length of Your Credit History • 10% - Types of Credit Used • 10% - New Credit www.annualcreditreport.com

  9. U.S. Credit Scores in 2006 Up to 499: 1%500 - 549: 5%550 - 599: 7%600 - 649: 11%650 - 699: 16%700 - 749: 20%750 - 799: 29%Over 800: 11%

  10. Down Payments • Conventional = up to 20% • FHA = 3 – 5% • VA = 0%

  11. Choose a Lender • Get referrals and recommendations • Compare lenders: • APR • Discount points • Loan origination fees • Lock-in Options

  12. Choose a Mortgage Loan • Fixed-rate loans • Adjustable-rate loans • FHA Loans • VA Loans • Assumptions • Buy Down • Step Loans • Balloon Loans • Seller Financing • State Veteran’s Programs

  13. Borrower Beware! • Interest-Only Mortgages • 80/20 Mortgages • Subprime Lenders • Excessive Fees • Abusive Pre-payment Penalties • Kickbacks to Brokers • Loan Flipping • Unnecessary Products • … and more www.responsiblelending.org/issues/mortgage/sevensigns.html

  14. The Mortgage Application Process • Pre-qualification • Pre-approval • Formal application • Processing time • Conventional loans - 4 to 6 weeks • VA loans - 6 weeks to 2 months

  15. Select a Real Estate Agent Real estate professionals help you to: • Target suitable neighborhoods • Identify available homes • Identify prices and features • Compare cost per square foot of recent sales • Assess your financial situation • Manage the details

  16. Select a Real Estate Agent • Principal broker • Realtor • Listing agent • Selling agent • Buyer’s agent

  17. Interview Agents • Arrange a meeting to discuss your “needs” and “wants” • Review positive features of previous homes • Discuss areas you have visited • Ask for other recommended neighborhoods • Have agent recheck your loan qualifications or approval • Arrange appointments for you to see homes in your price range

  18. Do it yourself? • FSBO: For Sale by Owner • Rent to Own • Foreclosures • MLS: Multiple Listing Service

  19. Begin the Search Checklist for Your House Hunt Handout

  20. Negotiate the Deal • Property Values (Use “Comps”) • Offer to purchase • Set the price • List personal property • List repairs to be included • Include contingencies – home inspection, selling your house, etc. • Earnest Money • Get a Home Inspection

  21. Closing Costs • Between 2% and 4% of loan amount • Can be paid by buyer or seller • Negotiable

  22. Examples of Closing Costs • Appraisal ($350) • Attorney’s fees ($450) • Credit report ($60) • Escrow/title company costs ($300) • Home inspection ($100 - $300) • Home warranty programs (varies with realtor) • Loan origination fee (0-2%) • Pest inspection fee ($100 - $200) • Recording fee ($50 - $100) • Survey ($150 - $200) • Title search and insurance (based on loan amount)

  23. Pre-Paid Costs • Private Mortgage Insurance (PMI) • Mortgage Insurance Premium (MIP) • VA Funding Fee • Homeowner’s insurance - 14 mos. • Property taxes - 3 mos. • Interest - Date of closing to end of month

  24. Closing • Take possession • Collect all keys/change locks • Request seller provide: • Operating instructions for appliances, heating/cooling system • Names of contractors • Paint colors • Locations of utility turn-offs • Security system combinations, if applicable

  25. Reducing Payback Time:Shorter Loan Term Principal & Interest $817 $600 Payment (per mo.) Total paid $147,075 $178,967 over term in P & I 15 Year 30 Year Total Savings 15 year vs. 30 year = $31,892

  26. Reducing Payback Time:Prepaying Principal • Prepay the principal - 30 to 20 yrs. • Extra lump sum payment per year • Increase monthly payment by 1/12th • Bi-weekly payments (pay one-half of mortgage payment every other week) • Prepay the principal - 30 to 15 yrs. • Pay the next month’s principal amount with each payment

  27. Early Mortgage Payment • Advantages • Emotional Security • Future Investing • Retirement Needs • Reduces Stress • Disadvantages • Missing other investment opportunities • Lost tax savings • Larger monthly payments • More frequent payments

  28. Homeowner’s Insurance Minimal Coverage: • Dwelling, cost to rebuild not what you paid • Other structures • Personal property • Living expenses • Personal liability, up to $100,000 • Medical payment, set at $1,000 per person

  29. Additional Coverage • Replacement Cost • Umbrella • Riders • Flood Insurance • Earthquake Insurance

  30. Reduce Premium Costs • Shop around • Raise deductibles • Ask for non-smoker’s discount • Install fire alarm/extinguisher • Same company as life and auto insurance

  31. Summary • Identify “wants” and “needs” • Know what you can afford • Research homes, agents, lenders and loans • Get a home inspection • Adequately insure the home • Enjoy your new home!

  32. Print your Certificate Click on the following link to add your name to the certificate and print it: Home Buying

More Related