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ON YOUR WAY HOME

ON YOUR WAY HOME. A little about buying and owning a Home. Main advantages of renting are:. Ease of mobility Fewer responsibilities Lower initial costs. Common disadvantages of renting your housing are:. Few financial benefits in the form of tax deductions

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ON YOUR WAY HOME

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  1. ON YOUR WAY HOME A little about buying and owning a Home

  2. Main advantages of renting are: • Ease of mobility • Fewer responsibilities • Lower initial costs

  3. Common disadvantages of renting your housing are: • Few financial benefits in the form of tax deductions • Restricted lifestyle, decorating, having pets, and other activities • Legal concerns • Nothing to show at the end of the ownership period.

  4. Key benefits of buying your housing are: • Tax savings • Pride of ownership • Flexibility in using the property

  5. Disadvantages of buying your housing may include: • Financial risks • Limited mobility • Higher living costs due to repairs and maintenance

  6. A few important terms • MORTGAGE A loan for a house or property • DOWN PAYMENT The amount you pay up front for a house or other major purchase

  7. A few important terms • DEED / TITLE Written proof of ownership • CLOSING COSTS Charged when you close the deal on your house, includes insurance, taxes, etc.

  8. REALTOR • The person who helps you buy a house • They work on commission • They can be very helpful, but be careful • Don’t be rushed into anything • If you do use a realtor, USE your realtor!

  9. A few important terms • EQUITY Difference between the value of the house and how much is owed. • P.M.I./M.R.I. Private Mortgage Insurance OR Mortgage Redemption Insurance. Covers the bank if you screw up on your payments • Earnest MoneyMoney you put up to show that you are interested in a house

  10. A QUICK LOOK AT SOME HOUSING STYLES

  11. CAPE COD

  12. BUNGALO

  13. COLONIAL

  14. RANCH

  15. SPLIT LEVEL

  16. The home buying process • PHASE ONE - DETERMINE YOUR NEEDS • What type of home should I (we) buy? • How much can we afford? • How much you make • Your credit rating • Current rates

  17. The home buying process • PHASE TWO - Find some houses you like in your price range • Make sure you • Set your priorities • (Neighborhood, How close to work, Shopping Convenience) • Take your time • It’s a long process! • Drive by, maybe some visits to open houses

  18. The home buying process • PHASE THREE - Decision Time • Narrow your choices • Visit lots of houses! • Use your realtor

  19. The home buying process • PHASE FOUR - Get Financing • How much down payment do you have? • Two months of bank statements • Two months of pay stubs • PHASE FIVE - Closing the Deal • Offers and Counter-offers • Funds Needed • Documentation (closing = signing)

  20. Costs of Buying a Home • DOWN PAYMENT • Mortgage Payment • Closing Costs • P.M.I./M.R.I. • Moving Expenses • Repairs • Appliances

  21. TYPES of MORTGAGES • Different Types of Mortgages are Available. • LENGTH OF MORTGAGE PAYMENT • 30 year • 15 year • TYPE OF RATE • Fixed • ARM (Adjustable Rate Mortgage)

  22. Mortgage Questions • What would the difference be between a 30-yr. and 15 yr. mortgage payment? • Why would you want a 15-yr. mortgage? • What rate will be initially lower an ARM or a FIXED? • What is riskier, an ARM or FIXED?

  23. Closing Costs • May be as much as $5,000 - $7,000 • Closing costs are fees associated with getting a mortgage.

  24. Closing Costs May Include: • Property Taxes • Attorney’s Fees • Loan Origination Fee • Title Search • Recording Fee • Appraisal Fee • Termite Inspection

  25. GUESS THE PRICE! $74,900 Estimated Monthly Payment: $467.50

  26. GUESS THE PRICE $334,900.00 Estimated Monthly Payment: $2,200.05

  27. Guess the Price, Part 2 Colonial 4 Bed, 2 Bath1,838 Sq. Ft. 315 E Walnut AvePainesville, OH 44077 $118,900

  28. Guess the Price, Part 2 4 Bed, 3.5 Bath2,672 Sq. Ft. 350 W Main St.Geneva, OH 44041 $89,900

  29. What might account for the differences in price? • LOCATION • LOCATION • LOCATION • Sq. Footage • # of BR & BATHS • Size of Property

  30. P.M.I./M.R.I. • Private Mortgage Insurance OR Mortgage Redemption Insurance. • Covers the bank if you screw up on your payments • Required until you have 20% equity in your property. • Can be up to $120 extra per month!

  31. LET’S TALK MORE ABOUT EQUITY • EQUITY Difference between the value of the house and how much is owed. “I have a lot of equity built up in my house.” “I am thinking about taking out a home equity loan”

  32. YOU JUST BOUGHT YOUR HOUSE LOW equity EQUITY $$$ AMOUNT OWNED BY THE BANK $$ AMOUNT OWNED BY YOU

  33. AS TIME GOES BY, YOUR EQUITY GROWSmore equity EQUITY $$$ AMOUNT OWNED BY THE BANK $$ AMOUNT OWNED BY YOU

  34. After several years, you have most of the house paid for. . high equity EQUITY $$$ AMOUNT OWNED BY THE BANK $$ AMOUNT OWNED BY YOU

  35. Eventually, YOU HAVE YOUR HOUSE ALL PAID OFF 100% equity EQUITY $$ AMOUNT OWNED BY YOU

  36. EQUITY Your house is worth $150,000 You paid $30,000 down payment How much equity? Your house is worth $220,000 and you have 20,000 left to pay How much equity?

  37. What Good is Equity? • Allows to borrow money on the equity of your house • Adds to the CAPITAL part of your credit rating (what you own) • As a bank, they are more likely to give you more credit if I know you have a house

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