1. Finding and Selecting a Home

2.  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

3.  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?

4.   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

5.   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

6.  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

7.  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

8.   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

9.   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.

10.   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

11.   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

12.  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

13.  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

14.  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

15.  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

16.   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