ON YOUR WAY HOME
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![Page 1: ON YOUR WAY HOME](https://reader035.fdocuments.net/reader035/viewer/2022062422/56813863550346895da011b5/html5/thumbnails/1.jpg)
ON YOUR WAY HOMEA little about buying and
owning a Home
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Main advantages of renting are:
• Ease of mobility • Fewer responsibilities • Lower initial costs
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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.
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Key benefits of buying your housing are:
• Tax savings • Pride of ownership • Flexibility in using the property
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Disadvantages of buying your housing may include:• Financial risks • Limited mobility • Higher living costs due to repairs
and maintenance
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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
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A few important terms
• DEED / TITLEWritten proof of ownership• CLOSING COSTSCharged when you close the deal on
your house, includes insurance, taxes, etc.
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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!
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A few important terms• EQUITYDifference 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
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A QUICK LOOK AT SOME HOUSING STYLES
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CAPE COD
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BUNGALO
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COLONIAL
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RANCH
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SPLIT LEVEL
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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
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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
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The home buying process
• PHASE THREE - Decision Time– Narrow your choices– Visit lots of houses!– Use your realtor
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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)
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Costs of Buying a Home
• DOWN PAYMENT• Mortgage Payment• Closing Costs• P.M.I./M.R.I.• Moving Expenses• Repairs• Appliances
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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)
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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?
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Closing Costs
• May be as much as $5,000 - $7,000
• Closing costs are fees associated with getting a mortgage.
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Closing Costs May Include:
• Property Taxes• Attorney’s Fees• Loan Origination Fee• Title Search • Recording Fee• Appraisal Fee• Termite Inspection
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GUESS THE PRICE!
$74,900
Estimated Monthly Payment: $467.50
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GUESS THE PRICE
$334,900.00
Estimated Monthly Payment: $2,200.05
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Guess the Price, Part 2Colonial
4 Bed, 2 Bath1,838 Sq. Ft.
315 E Walnut AvePainesville, OH 44077
$118,900
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Guess the Price, Part 2
4 Bed, 3.5 Bath2,672 Sq. Ft.
350 W Main St.Geneva, OH 44041
$89,900
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What might account for the differences in price?
• LOCATION• LOCATION• LOCATION• Sq. Footage• # of BR & BATHS• Size of Property
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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!
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LET’S TALK MORE ABOUT EQUITY
• EQUITYDifference 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”
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EQUITY
$$ AMOUNT OWNED BY YOU
$$$ AMOUNT OWNED BY THE BANK
YOU JUST BOUGHT
YOUR HOUSE
LOW equity
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$$ AMOUNT OWNED BY YOU
$$$ AMOUNT OWNED BY THE BANK
EQUITYAS TIME
GOES BY, YOUR
EQUITY GROWSmore equity
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$$ AMOUNT OWNED BY YOU
$$$ AMOUNT OWNED BY THE BANK
EQUITY
After several years, you have
most of the house paid for. .
high equity
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$$ AMOUNT OWNED BY YOU
EQUITYEventually
, YOU HAVE YOUR
HOUSE ALL PAID
OFF
100% equity
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EQUITY
Your house is worth $150,000You paid $30,000 down paymentHow much equity?
Your house is worth $220,000 and you have 20,000 left to pay
How much equity?
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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