Lesson 2: How to Buy Real Estate

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August 23, 2016 at 5:13 pm  •  Posted in f16-econ491 by  •  0 Comments

Wed, Aug 24

Review:

  • Syllabus
  • Why Real Estate
  • Attendance

Presentation:

  • Buying a Home
    • Build Credit and Save $$ for a down payment
      • Need 20% unless you qualify for special programs (e.g. VA or first time buyer)
    • Learn about mortgage loan options
      • Fixed rate
      • ARM
      • Amortization schedule
      • PMI
      • Seller financing and “balloon” payments
    • Get Pre-Approved for a loan
      • Mortgage brokers
      • Banks
      • Credit Unions
    • Find an agent
      • Buyer vs Seller agency
      • Conflicts of interest
      • FSBO
    • Search for homes in your budget
      • Property Types
        • Single Family (SF) home
        • Condo (HOA), Townhouse
        • Duplex, Triplex, Fourplex
      • Search
        • MLS
        • Zillow, Trulia
        • Realtor.com
        • Local agencies
    • Make an offer
      • Begin Negotiation – the envelope approach
      • Beware emotional attachment – be prepared to walk away
    • Enter into a contract to purchase real estate (“Under Contract”)
      • Disclosures
      • Terms
      • Personal Property
    • Conduct due diligence
      • Inspection
      • Appraisal
    • Secure a home loan, lock in mortgage terms
    • Arrange property hazard insurance coverage
    • Confirm final closing costs
      • Title Insurance
      • Property Taxes
      • Loan origination fees
      • Other fees or negotiated terms
    • Prepare to wire or obtain certified funds for the purchase and payment of closing costs
      • Wire funds to Escrow (Title Company)
    • Schedule the “Closing” (usually takes place at a Title Company)
    • Close the deal (aka sign your life away) and take possession of the property
    • Start making mortgage payments and budgeting for maintenance expenses
  • How to calculate costs
    • Down payment – 20%
      • If under 20% you will have to pay PMI or take out a 2nd mortgage
    • Principal and Interest payments – Loan Calculator
    • Property Taxes – Pueblo County Records
    • Hazard Insurance
      • Obtain quotes from insurers
      • For a ballpark estimate in Pueblo use 1% of purchase price

Assignment:

  • Search for and identify one (1) property currently listed For Sale in Pueblo County
    • Note asking price and use for for calculations
    • Calculate down payment
    • Calculate monthly principal and interest payments
    • Look up property taxes
    • Estimate hazard insurance
    • Estimate total monthly mortgage payment

 

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