The Basics of Buying a House By Mr. T

Should I buy or Rent? Most cases – better to buy than rent ASAP Exception: – Very low rent – Plan to move in a few years Most people think buy better because – “You stop throwing you money away on rent” Equity build from buying offset by taxes, insurance, maintenance and mortgage interest

You don’t pay cash You don’t pay cash when you buy. – Nobody could afford a house! Get a mortgage. – Borrow money from bank – Pay back over time – 15 yrs/30yrs – Pay interest – 7%

Down Payment Cash Down Payment is a percent of sale price of house 0% - 20% typical Higher down payment – Easier get loan – Lower interest rate – Lower monthly payment

How much can I afford? Typical rule: 3 times annual income – Income $50,000 = $150,000 house Possible – buy bigger home and rent part Factors: – No debt – bigger house – Large down payment – bigger house – Good credit – bigger house

How much does a home cost? Median Price $175,000 – – Median is the middle of houses sold – 50% Varies by region in US – Northeast - $225,000 – South - $150,000 – Midwest - $140,000 – West - $230,000

How much money up front? Down Payment – up to 20% sale price Closing Costs – up to 8% sale price – Survey, title company, points, deeds Miscellaneous Costs – up to $800 – Application fee, bank fee, inspection of house Typical - $4000 up to $40,000

How to get a loan? Four typical requirements to qualify: – Down payment money – savings – Income – 3 times higher than income – Two years solid employment history – same job – Decent credit

How to find a house Credit report – get copy and clean up! Pre-approve at bank – letter says you can afford a house Find a realtor – help find house and show Find house and get disclosure Make offer! Sign Contract

How to find a house Professional house inspection House appraisal – verify value of house Insurance agent – homeowners Closing! House is yours – yeah baby.