Vocabulary
Conventional Mortgage
Borrower pays a fixed interest rate for the length of the loan
What happens to your monthly payments/your mortgage when you increase your down payment?
It gets smaller
Name an advantage of an older home
Have traits that would be costly to include now
In well-established neighborhoods
Have streets, curbs, and sidewalks already installed
Landscaping is well developed with mature trees and lawns
Buyers may get more space for their money
Have more character than newer homes
What does personal liability insurance cover?
Protects the homeowner in the case of an accident
Someone slips and falls on the property and the insurance would cover any medical expenses
If a tree falls and damages a neighbor's property, they will pay for damages
Where can you find homes for sale?
Newspaper ads
Look for “For Sale” signs in neighborhoods you like
Scan real estate websites
Go to open houses
Work with a real estate agent
The portion of the purchase price that must be paid in cash at the time of purchase
When there are more homes for sale than buyer's
Cost of repairs may be high
May be structural problems
Many older homes have little or no insulation, inefficient heating and cooling systems
Could be health hazards
Must alter any decorating features you don’t agree with which adds cost
What should you include on a household inventory?
Record of items owned
When they were purchased
What they cost
Who attends a closing meeting?
Seller, buyer, lender, any real estate agents, and any lawyers that either party wishes to include
Adjustable-Rate mortgage
A loan where the interest rate changes after a certain length of time
What does it mean to prequalify?
After obtaining information from the buyer, a lender provides a written estimate of how large a mortgage the buyer is likely to be approved for.
What does a Custom-built home mean?
An architect designs you a one-of-a-kind home to be built new
What are 3 disasters that property insurance covers against?
Fire, lightening, smoke, windstorms, hail, vandalism, and theft
What is a contingency?
Conditions that must be met for the sale to become final
Many contracts state offer is “Contingent upon financing”
Another contingency could be a satisfactory report from a home inspector.
Escrow
Money held in trust by a third party until a specified time
How much of your gross income should your mortgage be?
28%
Equity
What is one supplemental insurance you can buy?
floods, earthquakes
Where does your earnest money go?
In escrow
Eventually becomes part of your down payment
Graduated Payment Mortgage
Payments start out low and increase in the later years of the loan
Name 3 closing costs
Title search fee
Origination fee
Survey fee
Appraisal fee
Points
Home inspection fees
Attorneys fees
Credit report fee
What is an advantage of a newer home?
They come clean and in good condition
Have more modern kitchens and usually more than one bathroom
Often includes major appliances such as dishwashers and built-in ovens
Buyer may have freedom to choose exterior and interior materials and designs.
Typically, easier to finance since you may be ale to arrange financing through the developer or builder.
Lenders may accept a smaller down payment for a new home than for an old home.
Maintenance costs should be minimal due to the home being new
New homes generally cost les to heat due to being built with energy-saving guidelines
How much insurance coverage should you purchase?
(In relation to the price of the home)
80% to 100% of the cost to replace the structure
or
Enough to replace the home should it get destroyed
What are points?
One-time fee sometimes charged by lending companies
Typically 1% of mortgage cost