Lesson 2: How to Buy Real Estate

August 23, 2016

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