Advantages of Home
Ownership
• Equity – The difference between the
market value of property and the
amount owed on it.
• Example: House appraised at
$150,000 Loan Balance $120,000
Equity is $30,000
• Tax Savings – Deductible expenses:
interest on home loan, property
taxes.
• Quality of Life – Freedom
Cost of Home Ownership
• Down Payment
• Mortgage
• Closing Cost – Settlement cost at
closing which are expenses incurred
in transferring ownership from buyer
to seller
• Property Taxes
• Insurance
• Utilities
• Maintenance and Repairs
Closing Cost Examples
• Title Search
• Credit Report
• Loan Fees
• Paperwork Fees to Attorneys
• Recording Fees
• Property Taxes
• Appraisals
• Origination Fees
Title Search
• A legal search to determine if a
piece of property has a lien
against it.
• A clear title is a needed to sell
property.
Credit Report
• A check of a persons credit
history.
• Score needs to be above 620.
• Some loans require a score of
680.
Property Taxes
• Prorated Taxes – Tax is divided
between seller and buyer due to
the day of the closing. Seller
pays up to closing, buyer pays
after closing.
Appraisal
• An up to date price evaluation
of a piece of real estate.
• Completed by licensed
appraiser.
Origination Fee
• Fee charged by mortgage
company. Usually 1% of loan
amount.
• For example $100,000 loan
would have origination fee of
1,000.
• This fee can be negotiated.
• Buyer pays this fee.
Working with a Realtor
• Real Estate Agents are trained and
licensed to assist in the real estate
marketing and buying process.
• Real Estate Agents earn a
commission for their work.
• Commissions vary, but are usually
around 6% of sales price. The seller
pays the commission.
What is MLS
• MLS is the Multiple Listing
Service
• It is a real estate marketing
service in which agents from
many real estate agencies pool
their home listings and agree to
share commissions on the sale.
What is an offer?
• A formal document that
expresses interest in entering
into a contract with someone.
• Must be in writing.
What is Earnest Money?
• Is a portion of the purchase price
that the buyer deposits as evidence
of good faith to show that the
purchase offer is serious.
• The money is set aside in an account
until the transaction is complete.
• If a buyer changes his mind, the
seller keeps the earnest money.
Contract
• Once an offer is accepted the
agreement becomes a contract.
Counteroffer
• Is a response to an offer.
• Counteroffers do not become a
contract to acceptance of
counteroffer.
• Must be in writing and signed.
How do I obtain
financing?
• You must qualify for a loan.
• Qualifications can be different
for each loan.
• The one requirement is you
need a good credit score.
• The score should be over 620.
Types of mortgage
financing
• Fixed-Rate Mortgages – is a
mortgage which the interest
rate does not change.
• Adjustable-Rate Mortgage
(ARM) – is a mortgage for which
the interest rate changes in
response to the movement of
interest rates in the economy as
a whole.
Types of Loans
• FHA
• FHA -THDA
• Conventional
Closing
• Meeting to close the deal.
Documents at Closing
1) Title – legal document that
establishes ownership.
2) Deed – legal document that
transfers title of real property from
one party to another.
3) Lien – is a financial claim on a
property. All old liens must be paid
off at closing to complete title work
and give clear title.