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Readings – Level 3

Buying a House

Readings


 
Many people in the United States consider real state a good investment, and it is the dream of almost every American to own his or her own home. If you want to buy a house, certain procedures must be followed, and certain elements must be in order. First of all, your credit history must be in good standing, and secondly, you must know how much you can afford to pay every month for your loan. It is generally considered that you can afford a house or apartment with a monthly payment equaling no more than one third of your total household income. To qualify for a loan, you must have between a fair and good credit rating, and at least two years of steady employment.

Obtain your credit report from a credit report agency, before applying for a loan. Some agencies may do this for free, while other may charge a small fee. An excellent credit score is considered to be above 760 points. Good credit is between 700 and 759 points, and fair to bad credit is consider anything below 700 points. The following items will definitely lower your credit score: bankruptcy, outstanding debts, late payments, very high credit card balances, and liens. If there are some of these troubling items in your credit report, it is recommended that these be cleared in order to increase your credit score before applying for a loan.

After checking and if necessary, repairing your credit report, you may start to shop around for homes. Do a lot of looking before buying! If you do not know anything about real state, find a realtor you can trust. Preferably, someone who has been recommended to you by someone you know. Next, shop around for financing. You can go to the bank where you have a savings or checking account, and talk to a loan officer, try an online lender, or check with a local or online mortgage broker. To get the best possible financing deal, you should consult at least two banks and two mortgage brokers, and make sure you understand all the terms and conditions of the loans they offer. For example: is the interest rate on the loan fixed or variable? What happens if you fail to make timely payments? Can you refinance in the event that interest rates change?

Once you have found a home you think you want to purchase, the next thing to do is to complete the loan application. This application will ask questions regarding your financial status and your employment history, and you may have to provide documentation like your most recent tax returns or paycheck stubs. After you get financing and the sale goes through, you will have the closing on the property, and the broker’s fees will have to be paid. Generally, though, those fees are paid by the seller, so you are now free to start thinking about how to turn your new house into a home.

Vocabulary and Expressions

Real state = realty, a piece of land, including the air above it and the ground below it, and any buildings or structures on it.
Procedures = an act or a manner of proceeding in any action or process; conduct.
First of all = firstly, before anything else.
Credit history = a record of an individual’s or company’s past borrowing and repaying behavior.
Secondly = adverb, in the second place; second.
Loan = a sum of money lent at interest.
Household income = the total income of all members of a household.
Shop around = to go from place to place in search bargains.
Realtor = a real estate agent who is a member of the National Association of Realtors.
Steady employment = working without any interruptions for a period of time.
Credit report = a report outlining an individual’s credit history, public records and credit worthiness.
Credit report agencies = agencies which collect and sells information about the creditworthiness of individuals.
Bankruptcy = the state of a person or firm unable to repay debts.
Fair = just, satisfactory, acceptable, OK.
Fee = a charge or payment for professional services.
Outstanding debts = unpaid debts.
Late payments = a payment a lender receives after the due date has passed.
Lien = a legal claim against an asset which is used to secure a loan, and which must be paid when the property is sold.
Savings account = a deposit account at a bank or savings and loan which pays interest but cannot be withdrawn by check.
Checking account = a deposit account at a bank or savings and loan which pays interest but cannot be withdrawn by check.
Loan officer = a epresentative of bank, credit union, and other financial institutions that find and assist borrowers in acquiring loans.
Lender = individual or firm that extends money to a borrower with the expectation of being repaid, usually with interest.
Mortgage broker = an individual who gathers paperwork from a borrower and passes that paperwork along to a mortgage lender for underwriting and approval.
Fixed interest = interest rate that will remain at a predetermined rate for the entire term of the loan.
Variable interest = an interest rate that moves up and down based on the changes of an underlying interest rate index.
Loan application = legal document containing personal and financial information, which is required by a lender prior to issuing a loan commitment.
Financial status = report summarizing the financial condition of an individual, partnership, or business organization.
Employment history = information related to your work history as well as other information.
Paycheck stub = apay stub, paystub, pay slip, pay advice, or sometimes paycheck stub, is a document that an employee receives either as a notice that the direct deposit transaction has gone through, or as part of their paycheck.
Tax returns = the tax form used to file income taxes to the IRS.

Conversation Activities

1. Are houses cheap or expensive in your country
2. Is it easy or difficult to buy a house in your country?
3. Do banks in your country extend credit to people easily?
4. Do you think that the real estate business is a good business?
5. Are agencies credit score agencies in your country?
6. How can you improve your credit score?