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A HAPPY DAYThe day you buy your firsthouse will be a memorableoccasion. Why is your debtratio important when youbuy a house?Types of Home OwnershipYou have many choices in selecting a home, depending on how muchyou can afford and the desired size of the house and its location. SeeFigure 34.3 for more information on buying a home.Single- and Multifamily HomesSingle-family homes are the most popular type of home. They offerthe most privacy and usually have more overall usable space than othertypes of housing.BUYING A HOUSEPurchasing a house is acomplicated process. Whatare some possible results ofnot thinking through all theelements discussed in thischapter?Figure 34.3The Elements of Buying a HouseIt’s important to consider the following issues when making a home purchase.Location. Consider both the surrounding community and the geographic region. The samehome may vary greatly in cost depending on where it’s located: in Kansas or California, on abusy highway or a quiet street, in a suburb or an urban neighborhood.Down Payment. A large down payment reduces your mortgagecosts, but how much can you afford to pay up front?Mortgage Rates and Points. You’ll have to choosebetween a lower mortgage rate with points and a highermortgage rate without points. You’ll also need to consider whattype of mortgage to arrange. When you apply for the loan, beprepared to provide the lender with copies of your financial recordsand other relevant information.Closing Costs. Settlement costs may range anywhere from two tosix percent of the total amount you borrow. That’s in addition to thedown payment.Monthly Payments. Your monthly payment for interest, principal,insurance, and taxes will be among your largest, most enduring expenses.Beware of buying a home that costs more than you can afford.Maintenance Costs. Homes require a lot of repair and maintenance. Be sureto set aside funds for these necessities.Chapter 34: Buying a Home 733