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Analyzing Financial and Legal A spects of Home O wnership

Analyzing Financial and Legal A spects of Home O wnership. Housing and Interiors 2.03. Financial. Mortgages Conventional- pay a fixed interest rate for 15-30 years (length of loan). Your loan payment does not change.

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Analyzing Financial and Legal A spects of Home O wnership

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  1. Analyzing Financial and Legal Aspects of Home Ownership Housing and Interiors 2.03

  2. Financial • Mortgages • Conventional- pay a fixed interest rate for 15-30 years (length of loan). Your loan payment does not change. • FHA-Issued by Federal Housing Administration. Guarantees lender that debt will be paid. Must meet qualifications to get this loan- low to moderate credit ratings. • VA- people who have served in military, loan guaranteed by Department of Veterans Affairs. No down payment is required. Other advantages also.

  3. Estimating cost • Cost of house- Multiply annual salary by 2 ½. • Housing-to-income ratio- Your monthly payment should be no more than 28% of your gross monthly income. • Equity- difference between market value of a house and how much principal (money) is owed on mortgage. • Down Payment- how much money you are paying up front for the house. Varies.

  4. Legal Aspects • Purchase process • Earnest money- money given to the realtor to show interest in a house. • Agreement of sales-Meet with seller, agree to terms & conditions (sale price, down payment). Seller cannot back out. • Contingencies • Survey- Lender hires survey group to look at property, prepares drawing of property lines, and other aspects of property. • Inspections • General home-Inspector comes to look for structural soundness. Looks at roof & electrical system. • Termite- check the foundation to look for damage done by termites. Seller pays for inspection.

  5. Closing Costs • Title Search- done to make sure that the seller is the actual owner of the property • Appraisal- evaluation done on a home to make sure the value of the property is what they are asking. • Fees • Origination- 1% of the cost of the loan, paid to process you loan. • Attorney- pay a lawyer to represent During home buying process

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