THE ULTIMATE GUIDE TO BUYING AND FINANCING A HOME

THE ULTIMATE GUIDE TO BUYING AND FINANCING A HOME

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HOME LOANS

HOMEBUYING 101

Buying a home is a big decision that can open doors to friendships, community belonging, and a sense of ownership (not to mention financial benefits). Unfortunately, it's also something they probably didn't teach you in school. This guide will fill you in on the homebuying process from top to bottom, inside and out. So when you're ready to make your dream of homeownership real, you'll be prepared.

Let's get started.

3MORTGAGE BASICS 5HOMEBUYING TIPS 7THE PROCESS 9ALL ABOUT HOME LOANS 12THE RUN DOWN ON RATES 15DOCUMENTATION 18AFTER YOU CLOSE 20A LOOK AT REFINANCING 24APPENDIX

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Contents

MORTGAGE BASICS

Let's start with some homebuying ABCs. Here are several of the basic

terms you'll need to know as you go through this guide -- and as you inch closer to that new set of keys for your ring.

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THESE ARE JUST THE BASICS

Check out the appendix for some more advanced terms you might need to know.

Contents

MORTGAGE m?rgij (n)

An agreement between you and a lender that lets you buy a home without paying the entire cost up front. The home itself is used

to secure the loan.

INTEREST RATE int()rst rt (n)

Written as a percentage, this is the rate at which you pay interest on the principal amount of your home loan. All other things being equal, a lower rate means a lower monthly payment.

DOWN PAYMENT dounpmnt (n)

The money you pay up front to purchase a home. A down payment covers part of a property's purchase price, with the rest typically being covered by a home loan. (P.S. You won't necessarily need 20% down.)

PREAPPROVAL pri ` `proovl (n)

A written statement from your lender that officially determines how much you can borrow (AKA, how much home you can

afford). It's based on things like your credit score, income, and employment history.

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CLOSING klzing (n)

The final step in completing your real estate transaction. The property is officially transferred from the seller to the buyer and

the buyer signs the loan documents.

EQUITY ekwd (n)

The difference between the value of your home and the outstanding principal

balance on your mortgage.

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Contents

HOMEBUYING TIPS

Some words of wisdom: There's no universal rulebook to this whole homebuying

thing. But there are a few tips, strategies, and nuggets of information that can help you make it from start to finish without any major headaches.

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