Buying Your Own Home Kainan Cooper Block 2

I live in__Bettendorf_________My current career is__Physician__________
__$258,000______
My current salary is
BUYING A HOME
There are 9 steps to buying a home. Use this packet to go through the entire process. You will
also be given another sheet with your personal financial information on it in order to help you
through the process.
Step 1: Figure out how much you can afford.

Go to www.financialcalculators.com. Find the Mortgage Calculators section. Choose the How
Much Home Can I Afford? Calculator.
Scroll down to the link: How much home can you afford. Input the necessary numbers from
your given situation.
Yearly Gross Income
Set to 5%
Set to 30
Leave all at 0
Dont change these.
Look for this in the results:

What is the total
you can spend on a
home?
$689,728
Assume you need to have 20% of

that price to put downhow
much do you need? $676,203
Closing costs are fees you

have to pay to get a loan.
They are 2-5% of the price of
the home. How much do you
need? $656,883

__$258,000______
Go back to financialcalculators.com. Click on Should I Rent or Buy a Home? calculator. Input

your current rent. Input the purchase price of home from the first calculator. You have a 20%
down payment. Your loan will be for 30 years at 5%. Input the number of years you plan to stay
in home.
How much will you save (or not) by buying the home over the years you will live there?
$322,682
Step 2: Know Your Rights.

All borrowers have rights when getting a home loan. You should ask questions about the loan,
and realize that you can shop around for a home loan. Do a Google search to find the current
APR for:
30 year fixed mortgage? 4.209%
15 year fixed mortgage? 3.647%
What website did you use? www.wellsfargo.com
Step 3: Shop for a Loan

Go to www.hud.gov/buying. Click on the Looking for the best mortgage: shop, compare, negotiate
link. Open the PDF and look through the materials (and especially the glossary) to answer the questions
below:
Which type of loan is better: Fixed-rate or Adjustable-rate loans? Why? Fixed rate. Fixed rates are
loans which interest rates charged remain fixed for the loans entire term.
What is PMI and when is it required?

PMI is a risk-management product that protects lenders against a loss if a borrower defaults.
The money held in escrow is used to pay for: It is used to pay property tax and insurance during the
term of the mortgage.
Step 4: Learn about Homebuying Programs

Nothing to do in this stepjust be aware that there are programs available to help those that
cannot afford a house on their own. For example, Habitat for Humanity will use volunteers to
build a house for a needy family, if the family qualifies.
Step 5: Shop for a Home

__$258,000______
First you should choose a real estate agent. As a first time homebuyer, you should NEVER buy without
an experienced agent. Plus, it costs you NOTHING! Real Estate agents are paid by the sellers of a
home, and first time home buyers are not selling their homes, so they pay nothing!
There is nothing for you to do for this step, just remember this for your future!
Next you make a wish list. Fill in the wish list on the following 2 pages.
The Basics:
1. What part of town (or country) do you want to live in? Bettendorf
2. What price range? 500,000 to 600,000 No less than ? 200,000
than? 600,000
but no more
3. Are schools a factor and, if so, what do you need to take into consideration (e.g. want
specific school system, want kids to be able to walk to school, etc)? I want my kids to be
close to their school which would most likely be Bettendorf High School.
4. Do you want an older home or newer home (less than 5 years old)? Less than 5 years
old.
5. What kind of houses would you be willing to see? Mark all that apply.
One Story
-2 story
Split Foyer
Split level
Townhouse/condo
Mobile home
6. What style of house appeals to you most?
-Contemporary
-Traditional
No Preference
Southwestern
Colonial
7. How much renovation would you be willing to do? -A lot
A little
None
8. Do you have to be close to public transportation?
Yes
-No
9. Do you have any physical needs that must be met, such as wheelchair access? No
10. Do you have any animals that will require special facilities? No
11.
The lot
Larger than 1 acre
Smaller than 1 acre
Fenced-in yard
Garage
Carport
Patio/deck
Pool
Hot Tub/Spa Would
Extra Parking
Outbuildings
Special view
The Interior
Must Have
If so, what?
Would Like to have

Would like to have
Would like to have
Must have
Must have
Would like to have
Would like to have

__$258,000______
12. How many bedrooms must you have? 1
Would you like to have? 4
13. How many bathrooms do you want? 2

14. How big would you like your house to be (square feet) No less than: 13 281/363 acres
Not more than: 5
15. What features do you want to have in your house?
Air Conditioning
Carpet
Ceramic tile
Hardwood floors
Eat-in Kitchen
Formal Dining Room
Family Room
Greatroom
Den or library
Basement
Laundry Room
Fireplace
Workshop
No Interior Steps
in-law apartment
Spa in bathroom
Lots of windows
Must Have Would like to have

Must have
Must have
Would like to have
Must have
Must have
Would like to have
Must have
Must have
Would like to have
Would like to have
16. Are there any other special features or needs that you must consider when youre
looking for a home? Tall ceilings. Fireplace. Big kitchen. Big basement.
After filling out your wish list, you get to go shopping for a house. You would normally go visit many
homes with your agent to find the best home to fit your needs. We are going to do this online instead.
Use the following websites to find homes close to your maximum price from page 1.
www.iowarealty.com --This one usually has the most information!
www.zillow.com
www.coldwellbanker.com

__$258,000______
http://www.neiltimmins.com/
www.remax.com
There are many others, and you can use any websites that have home listings.
Find the top 3 homes that meet as many of your wish list items as possible AND are
close to your Max Sales Price. Then fill out the following table:
House 1
5751 Charlie Chase
Lane, Bettendorf
$495,900
2014
Residential
4
2
1
1
House 2
3028 Marynoel Avenue
House 3
5742 JUDGE Road
$419,900.00
2004
Residential
3
2
0
1
$415,775
2008
Residential
5
2
1
1
Garage (how many stalls?;

attached?)
Foundation Composition
Exterior composition
Driveway
# of fireplaces
Heat
Air Conditioner
Gross Taxes
School district
Other selling points of
interest:
2 car garage
2 car garage
2 car garage
Yes
1
Yes
Yes
$0.00
Pleasant Valley
HUGE walk in closet,
whirlpool tub, double
vanity, and ceramic
tiled shower
Yes
1
Yes
Yes
$0.00
Pleasant Valley
Sunroom w/soaring
ceilings & beautiful
hardwood floors.
Map the home using Google

Maps and tell about
positives/negatives of location
(ex: on busy street, close to
grocery store, close to public
transportation, etc.)
Pretty close to
highway, not that much
traffic
Not close to a lot traffic,

in a nice neighborhood
Yes
1
Yes
Yes
$7,22.0
Pleasant Valley
Four large bedrooms,
master suite is
complete w tile
shower and whirlpool
shower/toilet room
In nice neighborhood,
away from traffic
Assessed value of home from

Polk County Assessors page
(or iowaassessors.com)
$210,000
$411,460
$421,050
Location (address)
List Price $
Year Built
Style of home:
# of bedrooms
# of full baths
# of baths
# of half baths
Above Grade Square
Footage
Lower Level Finished Square
Footage
Total Finished Square
Footage
Lot size (either SF or acres)

__$258,000______
Last date and price of home

sale from Assessors page
Find the home on
www.zillow.com to find out
how many days it has been
on the market
5/29/2014
6/3/2004
4/9/2009
97 days
25 days
46 days
214k
199k
179k
Use www.zillow.com to find a

nearby home that has sold
recently, is a comparable
home, and tell me how MUCH
it sold for
Choose the house from above that meets most of your wishes and is close to your Max Price. Which
one did you choose? Why?
Step 6: Make an offer.

This is the part where you decide how much you should offer. You would try to determine the fair market
value of the home by looking at the comparable homes in the area, the assessed value, and the last
sales price. Write your offer here: $415,000
Step 7: Get a home inspection

Lets assume your offer was accepted. But before you buy a house, you should always pay to have it
inspected. Go back to www.hud.gov/buying website. Under Step 7, Click on the link For Your
Protection Get a Home Inspection.
Why should you get a home inspection? To evaluate the physical condition of the home: structure,
construction, and mechanical systems. Identify items that need to be repaired or replaced. Estimate the
remaining useful life of the major systems, equipment, structure, and finishes
Click on the 10 Questions to Ask a Home Inspector link.

How much does a typical home inspection cost? The average cost of a home inspection nationwide is
$432
Remember, if the inspector finds a major problem, you have only lost that amount of money, and you can
back out of your offer to buy the home.
Step 8: Shop for Homeowners Insurance

__$258,000______
Go back to hud.gov/buying. Click on the link 12 Ways to Lower Your Homeowners Insurance. Explain
what each of the items below mean:
Shop Around: Shop around is when you look around for the best bang for your bucks or the best possible
house you can get for the amount of money you would like to spend
Raise Your Deductible: A deductible is the amount of money you have to pay out of pocket for expenses
before the insurance company will cover the remaining costs.
When Youre buying a home, consider the cost of homeowners insurance: Home insurance is a type of
property insurance that covers a private residence.
Step 9: Sign papers

Go back to the first webpage to find this info: This is called the _Closing_________ or settlement.
This is when you actually become the owner of the house. Oh, and you have to sign a TON of
paperwork!
Home Ownership
Now, you get to live in the house! That also means you have to make the monthly mortgage payments.
Use the mortgage calculator online at www.financialcalculators.com to figure up your monthly payments.
Assume your offer was accepted.
Take your offer minus your down payment (on page 1) to figure out the loan amount.
You are getting 5% interest on your loan.
Assume you are paying it off over 30 years with yearly amortization.
YES, Have the calculator estimate the taxes, insurance, and private mortgage insurance.
WHAT IS YOUR TOTAL MONTHLY PAYMENT, including taxes, insurance, & PMI? $261,203
Now, take your Yearly Gross Income (given on card at beginning of this activitiy) and multiply it by .75
(this is assuming 25% is taken out for taxes).
Now divide that number by 12 months to find out your monthly net income. $16,325.18
What percentage is your payment of your monthly net income? (hint: take monthly payment divided by
monthly net income) %16

__$258,000______
Do you think this is a reasonable percentage? Explain. Yes, I do think this is a reasonable percentage. It
isnt too much, but it is just right.

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I live in__Bettendorf_________My current career is__Physician__________

Step 1: Figure out how much you can afford.

Yearly Gross Income

Dont change these.

Look for this in the results:

Assume you need to have 20% of

Closing costs are fees you

I live in__Bettendorf_________My current career is__Physician__________

Go back to financialcalculators.com. Click on Should I Rent or Buy a Home? calculator. Input

Step 2: Know Your Rights.

Step 3: Shop for a Loan

What is PMI and when is it required?

Step 4: Learn about Homebuying Programs

Step 5: Shop for a Home

I live in__Bettendorf_________My current career is__Physician__________

7. How much renovation would you be willing to do? -A lot

8. Do you have to be close to public transportation?

Would Like to have

I live in__Bettendorf_________My current career is__Physician__________

Would you like to have? 4

13. How many bathrooms do you want? 2

Must Have Would like to have

Would like to have

I live in__Bettendorf_________My current career is__Physician__________

Garage (how many stalls?;

Map the home using Google

Not close to a lot traffic,

Assessed value of home from

I live in__Bettendorf_________My current career is__Physician__________

Last date and price of home

Use www.zillow.com to find a

Step 6: Make an offer.

Step 7: Get a home inspection

Click on the 10 Questions to Ask a Home Inspector link.

Step 8: Shop for Homeowners Insurance

I live in__Bettendorf_________My current career is__Physician__________

Step 9: Sign papers

Assume your offer was accepted.

You are getting 5% interest on your loan.

I live in__Bettendorf_________My current career is__Physician__________

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I live inBettendorf_My current career isPhysician______

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