Home Ownership

							Buying a Home
Advantages                    Disadvantages
• Tax benefits                • Cost of maintenance
• Significantly contributes   and repairs
to your net worth             • Decreased mobility
• Hedge against inflation     • Risk foreclosure
                              • Risk of reduced
                              market value
What Can You Afford?
• A house is considered “affordable” if the
  mortgage is no more than 2.5 times your
  annual gross income.
• Monthly mortgage should not exceed 25% of
  your take-home pay.
Housing Ratio
• Banks often limit your
  mortgage payment to no
  more than 28%–36% of
  your monthly income.
• Size of your down
  payment and credit score
  determine where you fall
  on this scale.
Pre-Qualify vs. Pre-Approved
• Pre-qualify—first step in the mortgage
  process. It is a predictor of how much
  of a mortgage you can afford.
• Pre-approved—the process of
  applying for a loan and locking into
  that interest rate.
Buying Costs
• Down payment
  (typically 20% total home price)
• Mortgage application fees
• Closing costs
• Moving expenses
• Hook-up costs
• New furniture, carpeting, paint, etc.
What fits your lifestyle?
When purchasing your home, consider:
• Market value
• Location
• Condition
• Affordability
• Financing
• Special circumstances
Paying for your new home
• Financing options            – Bridge loan
  – Fixed-rate mortgage        – Mortgage
  – Adjustable-rate mortgage     buydown
  – FHA loans
  – VA loans
  – Interest-only loans
  – Option mortgages
  – Combo/piggyback mortgage
Educator Incentive Programs
• CalSTRS Home Loan Program
• HUD Good Neighbor Next Door
• California Housing Finance Agency
Final Steps
•   Loan processing
•   Close the deal
•   Final exchanges
•   Final costs
Selling a Home
•   Make repairs before selling
•   Stage your home for selling
•   Price your home to sell
•   Pull comparable listings and sales data
•   Work with real estate agents
Home Inspection
•   Structure
•   Exterior
•   Roof & attic
•   Plumbing
•   Systems (heater, fireplace, etc.)
•   Electrical
•   Appliances (dishwasher, oven, etc.)
•   Garage
Listing Your Property
• Open listing
• Exclusive agency
  Listing
• Exclusive right-to-
  sell Listing
Listing Your Property
•   Real estate commissions
•   Selling your home yourself
•   Short sales and foreclosures
•   Owner financing
Benefits of Owner Financing
•   Higher sale price
•   Tax breaks
•   Monthly income
•   Higher interest rate
•   Shorter listing term
Possessing/Vacating Home
Moving in                 Moving out
•Get key                  •Leave keys
•Hook up utilities        •Drop utilities
•Budget for               •Arrange movers
maintenance/furnishings   •Forward mail
•Buy tools
Parting Words
 Normal is getting dressed in clothes that
 you buy for work and driving through
 traffic in a car that you are still paying for
 to get to the job you need to pay for the
 clothes and the car and the house you
 leave vacant all day so you can afford to
 live in it.
                       — Ellen DeGeneres