Buying a HouseBuying a House

Mortgages & ForeclosuresMortgages & Foreclosures

Your Dream HouseYour Dream House

What does it look like?What does it look like? How many bedrooms/bathrooms?How many bedrooms/bathrooms? Take into consideration the location, Take into consideration the location,

size, color and neighborhoodsize, color and neighborhood

MortgagesMortgages Mortgage = a type of loan for property borrowed Mortgage = a type of loan for property borrowed

from a bank or credit union and paid back within from a bank or credit union and paid back within a certain time framea certain time frame– Making a down payment shows you a better candidate Making a down payment shows you a better candidate

for a mortgagefor a mortgage People make mortgage payments every month, People make mortgage payments every month,

but it can take many years to pay off the entire but it can take many years to pay off the entire amount—often 30 years. amount—often 30 years. – When taking out a mortgage, banks also charge interest When taking out a mortgage, banks also charge interest

on the money borrowedon the money borrowed– a down payment is required to secure a loan, most a down payment is required to secure a loan, most

commonly set at 20%commonly set at 20%– What’s the reason for a down payment?What’s the reason for a down payment?

Anything less than 20% up front for a down payment Anything less than 20% up front for a down payment means you are a high-risk borrower and will have to pay means you are a high-risk borrower and will have to pay insurance to protect the banks moneyinsurance to protect the banks money

ForeclosuresForeclosures ““Creditworthiness” is considered when applying Creditworthiness” is considered when applying

for a mortgagefor a mortgage– Having good credit means you will be considered Having good credit means you will be considered

as a good borrower and will be offered better as a good borrower and will be offered better interest ratesinterest rates

– Can also impact your ability to rent an apartmentCan also impact your ability to rent an apartment– Warning sign for mortgage lenders is a foreclosureWarning sign for mortgage lenders is a foreclosure

Foreclosure = when someone stops making Foreclosure = when someone stops making payments on a mortgage and the lender forces payments on a mortgage and the lender forces the sale of the home to recoup the borrowed the sale of the home to recoup the borrowed moneymoney

Some reasons for foreclosure:Some reasons for foreclosure:– Job loss, medical conditions that limit employment, Job loss, medical conditions that limit employment,

snowballing debt, divorcesnowballing debt, divorce

Buy It or Pass?Buy It or Pass?

Buy It or Pass?Buy It or Pass? In each scenario, figure out the expenses In each scenario, figure out the expenses

you need to pay for each house. you need to pay for each house. Determine whether you buy it or pass.Determine whether you buy it or pass.

Why are some mortgages better choices Why are some mortgages better choices than others?than others?

How can owning a home contribute to How can owning a home contribute to financial security or wealth accumulation?financial security or wealth accumulation?– If the value of a home increases or decreases If the value of a home increases or decreases

over time from the original purchase price, this over time from the original purchase price, this can influence whether money was made or lost can influence whether money was made or lost on the investment. What are the costs and on the investment. What are the costs and benefits of owning a home?benefits of owning a home?