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 needs4. Get pre-qualified5. House hunt!6. Purchase7. 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?