BUYING A HOUSE

Vocabulary  Market value: the highest price that the property will bring on the market  Equity: difference between the market value and amount owed  Appraisal: when a real estate agent estimates the market value of your home by comparing it to similar homes that have sold recently

Vocabulary  Real estate agent: person trained to analyze the market, help you find the right home, and help you with the purchase, financing, and closing  Title: a legal document that establishes ownership  Mortgage: home loan

Steps to Buying a Home 1. Decide: Do you really want to buy? 2. Decide: How much can you afford? 3. Determine wants and needs 4. Get pre-qualified 5. House hunt! 6. Purchase 7. Responsibility!

1. Decide: Do you really want to buy?  Pros  Pride of ownership  Tax benefits  Build equity  Cons  Expensive  Higher living expenses  Limited mobility  Repairs/maintenance

2. Decide: How much can you afford?  Additional Costs…  Mortgage  Taxes  Insurance  Utilities Water/Sewer Heat Electricity Cable/Internet  Up-front (hidden) costs  Down payment  Closing costs  Taxes

3. Determine wants and needs  Location  Work  School  City/country  Neighbors  Yard  Buy or build?  # of bedrooms & bathrooms  Type of home (condo, twinhome, duplex, single family)  Garage  Etc, etc, etc

4. Get pre-qualified  Banks look at:  Likelihood of repayment  Income  Job stability  Assets  Down payment  Debt  Credit history/score  Possible loan programs? Determines interest rate and term

5. House hunt!  Realtor  Newspaper  Online  Drive around neighborhoods

6. Purchase  Offer: formal document that expresses interest in entering a contract with someone else  Explains the terms of the purchase, price, down payment, mortgage amount, dates when you will close & take possession  Counter-offer: offer in response to another offer  Acceptance: formal agreement to the terms of the offer  Forms contract between parties

7. Responsibilities  Make payments  Purchase insurance  Pay taxes  Perform maintenance  Be a good neighbor  Community involvement

Check for Understanding 1. ________ is the highest price a property will bring on the market. 2. Name a place people commonly search for homes that are currently for sale. 3. Name one advantage of owning your own home compared to renting. 4. Name one disadvantage of owning your own home compared to renting. 5. Ben still owes $100,000 to the bank for his mortgage. He decides to sell his house. If the home sells for $120,000, how much equity does he have into the home?