BUYING AND SELLING A HOME CHAPTER 8 3

BUYING AND SELLING A HOME CHAPTER 8. 3

BENEFITS OF HOME OWNERSHIP • Stability • Allows for individual expression • Pet and family flexibility • Deduct interest charges and property taxes • Home value can rise • Can make a profit when selling • Can have no further mortgage payments when loan is fulfilled

DRAWBACKS OF HOME OWNERSHIP • Financial Risk • Saving money for a down payment can be difficult • Property value may decline • Limited mobility • Costs of upkeep, utilities, and repairs • Large down payment required

STEP 1: DETERMINE YOUR HOME OWNERSHIP NEEDS • Determine affordability and your needs • Price and down payment – how much can you afford • What size and quality do you need? • What type of home do you want to live in? • Single family, multi-family, condominium, town home, etc.

STEP 2: FIND AND EVALUATE A PROPERTY TO PURCHASE • Selecting a location • Hiring a Real Estate Agent – • They get between 3 -6% if property is sold • Conducting a Home Inspection • Hire a home inspector to check the home for any foundation cracks, electrical issues, or other home risks.

STEP 3: PRICE THE PROPERTY • Listing Price – the price the owner is asking for • Consider the market, location, inspection report, and financing before making an offer. • Negotiate the purchase price

STEP 4: OBTAIN FINANCING • Determine the amount of your down payment • If you put down less than 20%, you will have to pay for Private Mortgage Insurance. • Mortgage – a long term loan to buy property • Can borrow a loan from a bank, credit union, private mortgage company. • They pay the full amount of your loan and then you pay them back with interest. • Interest Rate • Fixed mortgage – stays the same rate • Adjustable-rate mortgage – can fluctuate based on the market • Qualifying for a loan • Credit report, income, assets

STEP 5: CLOSE THE TRANSACTION • Money is paid • Papers and contracts are signed • Closing Costs – additional fees and charges • Deed, Title Insurance, Lawyer fees, Appraisal fee, etc.

SELLING A HOME • Set a price • Appraisal – an estimate of the current value of your property • Is the home in demand? • Determine if you are going to list the home with a real estate agent

THINK ABOUT IT • After several weeks of searching for a new home, Rene e has found a house that seems to be in good shape and is located in a nice neighbor- hood. The listing price is $125, 000, which is about $15, 000 more than she wants to pay. She would like to make a lower bid, but the housing market is tight, and she worries that someone else may buy the house at the listing price. Rene e wonders what she should do.

THINK CRITICALLY • State three reasons you should carefully inspect the property you plan to purchase.