COA 4131 1st Edition Lecture 10 Outline of Last Lecture I Did You Know II Renting vs Owning III Budget Items IV Median House Prices Outline of Current Lecture I Owning II Steps in Buying Home Current Lecture A Owning a Appreciation i Sense of pride b Reasons for buying B Steps in Buying a Home a Step 1 i Determining Financial Readiness 1 Bank will do this for you ii PITI 1 Principle interest taxes insurance iii Median price of a house 1 132 000 but has gone up 2 depends where you live b Step 2 i Know your preferences ii What are you re non negotionables c Renting is fine for 2 to 5 years d Security i Cash ii CD s iii Savings bonds iv Enough insurance e Real estate involves more risk but maybe a greater return over time f Building a down payment normally 10 of the price of the house g Step 3 i Making an offer ii Real estate agents 1 Exclusive to them for about 3 months to 6 months according to contract 2 Pay them 6 of home price a This is the norm 3 Find out how many houses they ve already sold 4 Normal for people to start selling themselves and then turn to a realtor when it doesn t sell 5 Time of year for selling involves where in the world you are selling buying a Summer time is a better time for buying iii How to set up home for potential buyers to look at 1 Empty versus lived in a Some people like to see it empty but others like to see things like flowers or something to make it look homey b No pictures of dog family or anything personal 2 In new houses they will set up the home with tinier furniture a Master bedroom will have a queen bed instead of a king to make it look bigger 3 Buyer s agent a May pay them 1 or 2 percent b Very rare iv Binder 1 Earnest money a Realtor will give check for seller to hold onto until they get cleared from bank to secure spot b If it is accepted i Could be taken off of house price ii Or could be given back and just rip up the check c It is legal for the seller to keep the check if you are not cleared or something i Don t go around giving checks to all these different houses ii Careful when you write these checks v Negotiating 1 Bidding wars 2 If you go to low you could be out bidded or insult the people h Step 4 i Getting financing 1 Title to property a Legal right of ownership of property b Make sure you will own it free and clear c Title search does cost money but clearly worth it 2 Abstract ii iii iv v vi vii viii ix i a Written history of the property so you will know previous owners 3 Issues you a deed a This deed grants you ownership b People put it in safety deposit box proves you are owner Mortgage loan 1 Can be from a whole lot of sources 2 Can be transferred 3 Some people do 15 years a Pay more but own it free and clear after 15 years Down payment Sources of loans Types of loans 1 Fixed rate conventional a Fixed at 6 for 30 years b Doesn t mean you have to stay there for 30 years most people do not live there for 30 years Adjustable rate mortgages a Range from 3 to 6 percent b Can start off low and then rise c More risky d Range from 3 to 6 percent e Can start off low and then rise f More risky FHA and VA 1 Low income buyers 2 Will get a 3 VA a Veteran s administration b Can get a better deal on a house Owner financing Assumable mortgages 1 Pre owned 2 Assume the previous mortgage for a better deal Step 5 i Closing 1 When you exchange keys and everything 2 Physical meeting for an hour or two at a conference room 3 Can be online now Skype 4 Exchange from person 1 to person 2 5 Huge commitment
View Full Document
Unlocking...