Presentation on theme: "Finding and Selecting a Home. What Are the Steps for Buying a Home? 1.Determine if you should rent or buy 2.Determine how much you can afford to spend."— Presentation transcript:
What Are the Steps for Buying a Home? 1.Determine if you should rent or buy 2.Determine how much you can afford to spend 3.Get your loan Pre-approved 4.Find the kind of home you want and need and Place an offer on the house
Rule of Thumb – you can afford a house that costs up to 2.5 times your annual gross income. Large debts will reduce this amount Example: if your annual income is $50,000 and you have little debt, you should be able to afford a $125,000 home. (50000 x 2.5) *Your Mortgage Loan Officer can help you figure this out.* Can you Afford It?
Chose a financial institution that you are comfortable working with. Timing is everything so make sure your Mortgage Loan Officer knows you timeframe Compare rates and fees Get your loan Pre-approved
Mortgage (home loan) - Is a loan to purchase real estate Principal - Amount you borrow. Equity - The difference between the value of your home and the amount you owe. Title - Legal right to ownership of property Liens - Claims against property for a debt. Terms You Should Know
Fixed Rate Mortgage Usually last 15 - 30 years. Same interest rate. Payment does not change. Adjustable Rate Mortgage Rate can move up or down with the economy. ARM specifies how often and how much. Assuming rates will not go up too much, usually lower at first. Types of Mortgages
FHA Mortgage For first time home buyers offered by the Federal Housing Administration. Can get this loan through a bank, savings and loan or other financial institution. Offer low down payments. VA Mortgage If you are a military veteran. Graduated Payment Mortgage Small payments at first and much larger ones later. Types of Mortgages – Cont
Down Payment Percentage of the purchase price, 5-20% Closing Costs Fees and services required to transfer ownership of the property Title search – investigation to see if the property has debt Moving Expenses Can you haul yourself or need a u-haul? Other Expenses Repairs? Utility installations Appliances (replacement of old) Looking At The Costs
Points A service fee in the form of a point. Each point equals 1% of the principal. Points are the costs of obtaining the loan. Homeowners Insurance – paid every 6-12 months Lenders require you to carry it. Helps protect you against loss, fire, theft and other hazards. Property Taxes – paid once a year Taxes based on the value of your property. Looking At The Costs – cont.
You can look by yourself or work with a real estate agent. Agents are trained to know the market, help you find the right home, and assist you with the purchase, financing, and closing. They earn a commission for their work. The seller pays the commission Finding a Home
You can find a home for sale Online Newspapers Special print booklets Real estate agent Use multiple listings: is a real estate marketing service in which agents agree to share commissions on their sales. Finding a Home – Cont
Market Value The highest price that the property will bring on the market. The price in which the property could be bought and sold on the market. Appraisal The estimate of the market value of your home by comparing it to similar homes that have sold recently. Home Buying
Offer A formal document that expresses interest in entering into a contract with someone else. Explains the terms of the purchase Explains what price you are offering The down payment Mortgage amount Dates you will close the deal and take possession Making an Offer
Earnest Agreement/Money A portion of the purchase price that the buyer deposits as evidence of good faith to show that the purchase offer is serious. Counted as part of the total offer amount Takes home off the market Set aside in a separate account until closing Make offer contingent on obtaining financing and property passing inspection. Making an Offer – Cont
Acceptance Formal agreement to the terms of an offer, forming a contract between two parties. If offer is not accepted they may make a counteroffer. They may make a new offer below the asking price, but higher than the previous offer. Making an Offer – Cont
Final step is the closing, a meeting between you, your lender, the seller & other interested parties Review & sign loan documents Exchange of documents between buyer, seller & lender Disbursement of funds You receive the deed to the property & join the ranks of homeowners! Closing