Buying Your Own Home

I live in___________
My current career is____________
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?
Assume you need to have 20% of

that price to put downhow
much do you need?
$184,608
$36,921
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?
$3,692- $9,230
I live in___________
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?
$184,608
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? https://www.wellsfargo.com/mortgage/rates/
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 because the amount of interest changed in an adjustable rate loan
What is PMI and when is it required?
It protects the lender against a loss if a borrower defaults on the loan. It is required for loans in which the
down payment is led than 20% of the sales price
The money held in escrow is used to pay for:
Paying money for taxes and insurance
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

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!
I live in___________
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?
Iowa
2. What price range? No less than? $100,000 per month
$184,608 per month
but no more than?
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)?
No
4. Do you want an older home or newer home (less than 5 years old)?
Newer
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? If so, what?
No
11.
The lot
Larger than 1 acre
Smaller than 1 acre
Fenced-in yard
Garage
Carport
Patio/deck
Pool
Hot Tub/Spa
Extra Parking
Outbuildings
Special view
Must Have
Would Like to have
Garage
Fenced in yard
Patio/ deck
Larger than 1 acre

Pool
Hot tub
The Interior
12. How many bedrooms must you have? 2
13. How many bathrooms do you want? 2
Would you like to have? 3-4
I live in___________
14. How big would you like your house to be (square feet) No less than: 150
Not more than: 2000
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
Air conditioning
Spa in bathroom
Carpet
Lots of windows
Family Room
Basement
Laundry Room
Hardwood Floors
Eat-in Kitchen
16. Are there any other special features or needs that you must consider when youre
looking for a home?
No
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
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
House 2
House 3
I live in___________
Location (address)
1326 14th
St,Bettendorf, IA 52722

910 6th
4017 27th Ave
StBettendorf, IA 52722 Rock Island, IL
List Price $
$140,000
$179,000
$124,900
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)
1955
1 story frame
3
2
1
0
884 sq ft
1957
Single family home
3
1
0
2
1,078 sq ft
1957
1.5 Story house
4
1
0
1
1404 sq ft
250 sq ft
576 sq ft
1,134 sqft
1,654 sq Ft
84 x 120
80x153
Garage (how many stalls?;

attached?)
Foundation Composition
Exterior composition
Driveway
# of fireplaces
Heat
Block
Brick
yes
1
Gas, Hot Water
Block
Brick
yes
1
Heating/Cooling: Gas,
Hot Water, Central Air
Air Conditioner
Cooling, Central Air
Heating/Cooling: Gas,
Hot Water, Central Air
Gross Taxes
School district
Other selling points of
interest:
$2,107.04
$2,938.48
Bettendorf
Bettendorf
Rock Island
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.)
By the highway, close

to a park
Next to a park, not on a

busy street
There is a church near

by, next to a busy
street
Assessed value of home from

Polk County Assessors page
(or iowaassessors.com)
Last date and price of home
sale from Assessors page
Find the home on
$114,030
$162,430
$140,000
$160,578
September 26, 2014
October 22, 2014
yes
September 10, 2014
I live in___________
www.zillow.com to find out

how many days it has been
on the market
$141,169
$102,470
$120, 500
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?
I chose the second house because it is the nicest house out of the three. It was well taken care of
on the inside and fits a lot of my wishes.
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: $170,000
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?
Gives the buyer more detailed information than an appraisal--information you need to
make a wise decision.
Click on the 10 Questions to Ask a Home Inspector link.
How much does a typical home inspection cost?
$300-$500
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

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:
I live in___________
It takes time but could save you good money. Check the Yellow Pages or contact your state insurance
department.
Raise Your Deductible:
The more money you can save on your premiums
When Youre buying a home, consider the cost of homeowners insurance:
Depending on where you live, it could cost less.
Step 9: Sign papers

Go back to the first webpage to find this info: This is called the ______________ 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?
$772.06
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.
$3,318

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I live in___________

My current career is____________

My current salary is ________

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

My current career is____________

My current salary is ________

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

Step 4: Learn about Homebuying Programs

Step 5: Shop for a Home

My current career is____________

My current salary is ________

but no more than?

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

Larger than 1 acre

Would you like to have? 3-4

My current career is____________

My current salary is ________

My current career is____________

My current salary is ________

Garage (how many stalls?;

Cooling, Central Air

Map the home using Google

By the highway, close

Next to a park, not on a

There is a church near

Assessed value of home from

September 26, 2014

October 22, 2014

September 10, 2014

My current career is____________

My current salary is ________

www.zillow.com to find out

Use www.zillow.com to find a

Step 6: Make an offer.

Step 7: Get a home inspection

Step 8: Shop for Homeowners Insurance

My current career is____________

My current salary is ________

Step 9: Sign papers

Assume your offer was accepted.

You are getting 5% interest on your loan.

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