1. Chapter 22
Buying a Home

2. Goals for Chapter 22.1
Discuss the financial and quality-of-life advantages of home ownership.
Describe the costs and responsibilities that accompany home ownership.

3. Advantages of Home Ownership
Increase in Equity
The market value of a home is the highest price that the property will bring on the market.
Equity is the difference between the market value of property and the amount owed on it.
How does your equity increase?

4. Tax Savings Quality of Life
Your mortgage interest and your property taxes are tax deductible.
Quality of Life

5. Costs and Responsibilities of Home Ownership
Down Payment
Most loans require a down payment of percent. (You need 20% to avoid paying PMI.)
Mortgage
A loan to purchase real estate is called a mortgage.
Mortgages can range from years.
Closing Costs
Closing costs are the expenses incurred in transferring ownership from buyer to seller in a real estate transaction.

6. Property Taxes
Insurance
Utilities
Maintenance and Repairs

7. Goals for Chapter 22.2
Describe the steps in the home-buying process, from selecting a home to buy through taking possession of it.
Discuss how to obtain financing and the events that occur at closing.

8. Working with a Real Estate Agent
Commissions range from 5-7 percent.
Agents have access to the Multiple Listing Service (MLS), which is a real estate marketing service in which agents from many agencies pool their home listing and agree to share commissions on the sales.

9. Making an Offer
An offer is a formal document that expresses interest in entering into a contract with someone else.
You will need to include earnest money with your offer. Earnest money is a portion of the purchase price that the buyer deposits as evidence of good faith.

10. An acceptance is a formal agreement to the terms of an offer.
If the seller wants to change any part of the offer, he or she makes a counteroffer.

11. Obtaining Financing
Down Payment Sources
Qualifying for a Mortgage

12. Types of Mortgages
A fixed-rate mortgage is a mortgage on which the interest rate does not change during the term of the loan.
An adjustable-rate mortgage is a mortgage for which the interest rate changes in response to the movement of interest rates.

13. Taking Title to Property
At the closing, you will be given the title to the property.
The title is a legal document that establishes ownership.
The deed is a legal document that transfers title of real property from one party to another.