Buying a House

1
Buying a House

• Chapter 5

2
Outcomes

• Learn some terminology about buying a house in
  Nova Scotia
• Learn rights/responsibilities of a homeowner and
  the bank

3
How is renting and buying different???
4
Types of Houses

• Condominium (condo) A building or group of
  buildings in which each unit owner has title to a
  certain unit
• You still have to pay monthly maintenance fees

5
Types of Houses

• Town House a row of homes sharing one or two
  common walls

6
Types of Houses

• Semi-detached Two houses side by side, sharing
  one common wall

7
Types of Houses

• Fully Detached a house that is owned by one
  family or person that does not have shared walls

8
Key Terms

• Mortgage A legal contract that is registered
  against the title to a property in order to
  guarantee that a loan will be repaid (the money
  you borrow to buy a house that is paid back over
  many years)

9
More Key Terms

• Mortgage Rate the interest rate, set by the
  bank, on a mortgage loan.
• Principal The amount of debt, not counting
  interest, left on a loan
• Amortization The period of time during which
  you will owe interest and the principal to your
  lender (usually 30 years)

10
More Key Terms

• Maturity Date The date on which the principal
  balance of a loan is due and payable
• Appraisal An estimate of the value of a
  property, made by a qualified professional. It
  is required by the bank to determine how much
  money the bank will lend you.

11
Key Terms

• Appreciation An increase in the value of a
  property due to changes in market conditions, or
  for other reasons. The opposite of depreciation.
• Foreclosure A legal process by which the lender
  (bank) or the seller forces a sale of a mortgaged
  property because the borrower has not met the
  terms of the mortgage. Also known as
  repossession.

12
Key Terms

• Market value The highest price that a buyer
  would pay and the lowest price that a seller
  would accept on a property. Market value changes
  over years and also over seasons.
• Realtor A real estate broker or an associate
  holding active membership in a local real estate
  board.

13
Key Terms

• Asset Anything with a dollar value that you
  own. Your assets are tallied up when the bank is
  trying to figure out what it can afford to lend
  you.

14
Key Terms

• Debt to Income Ratio The ratio, expressed as a
  percentage, which results when a borrowers
  monthly payment obligation on long-term debts is
  divided by his or her gross monthly income.
• DtI ratio Debt income x 100

15
Key Terms

• Property Taxes Taxes paid to the government for
  services in the community (road paving, street
  lights, etc)
• Equity The portion of the property which the
  owner actually owns, having already paid for it.

16
Key Terms

• Closing costs Expenses for buyers and sellers
  when they transfer ownership of a property
  (taxes, transfer fee, realtor fees, lawyers,
  etc). They often total thousands of dollars!
• Down payment Money paid to make up the
  difference between the purchase price and the
  mortgage amount. You need to have 5 (at least)
  to buy a home. Most people put down between 5
  and 20.

17
Key Terms

• Fixed rate mortgage A mortgage on which the
  interest rate is set for the term of the loan,
  regardless of future interest rate fluctuations.
  This makes payments predictable but it not always
  the cheapest alternative.
• Variable rate mortgage The amount you pay can
  go up or down, depending on Canadas interest
  rate at the time. Payments are unpredictable.