Welcome to the Listening Time podcast.
Hey everybody, this is Connor and you're listening to episode 118 of the Listening Time podcast.
Thank you all for listening.
I hope you're all doing well today and that you're ready to learn a little bit about buying a house in the US.
That's the topic of today's episode, and I've never bought a house in the US, I've never been through this process before, so I'm gonna talk from the knowledge that I have, but not from experience.
So I'm not giving any advice here.
And if you live in the US and you want to buy a house, then you'll definitely need to consult experts and do research and all of that.
But I just kind of want to give some general points regarding buying a house in the US.
Just to give you an idea of what it's like.
And I'll also talk a little bit about owning a house and the things that you need to pay that you might not know about.
So we'll talk about these different things today.
I think this will be educational for all of us, me included, because I had to do some research and get some ideas online while I was preparing for this episode, so it was also educational for me, and I think you'll all learn a little bit about this topic from this episode, and it should be interesting.
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All right, let's get started.
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You know what time it is.
It's listening time.
Okay, let's talk about buying a house.
So one of the most important things to consider when buying a house is the mortgage.
So a mortgage is a loan that you receive when you want to purchase a house and you don't have the money to buy it with cash 100.
You need to get a loan in order to have the money to buy this house.
So a loan just refers to money that somebody lends to someone else.
That means that they give it to someone else, but that other person needs to pay them back, with interest usually.
So that's a loan.
A mortgage is a type of loan specifically for houses and things related to that.
So this is, of course, one of the most important things to consider.
Because most people need a mortgage when they buy a house, because houses are very expensive, of course.
So there are different types of mortgages that you can get.
There are conventional mortgages.
These are loans that are just ordinary, typical loans specifically for your house, right?
There are conventional loans.
And then there are also government-backed loans.
So the government doesn't lend you money to buy a home.
It's not a lender in this case.
However, the government might insure a loan.
The government might back a loan in case you the person who is borrowing can't pay back what you owe.
So the government might back certain loans, and that's a different type of mortgage.
So, depending on the type of mortgage that you get, you might be able to put down a different percentage for a down payment.
The phrase down payment refers to the money that you need to pay upfront when you want to buy a house.
And the term upfront refers to something that you need to pay at the beginning.
So you have to pay a certain percentage upfront.
This is called the down payment.
So in the past, the norm was usually 20%.
That's how much money that people would typically put down upfront and then they would pay the rest of this off throughout the years and they would pay the interest on that mortgage.
So that's still a normal thing.
20% is still a normal amount. and many people still view it as the standard.
However, you can put less money down nowadays than 20, but you will probably have to pay mortgage insurance.
This is an added cost for people that want to put less money down so they have a cheaper payment now, but then they'll have to pay extra afterwards.
So it depends on your own situation and it depends on what type of mortgage you want to get and how much money you want to put down, but let's say that there's still the standard of putting down 20 as the down payment for the house.
That's pretty common.
So there's also the question of fixed rate mortgages and adjustable rate mortgages.
So the United States is unique in the sense that the main type of mortgage, the The primary mortgage, that is the most common type in the US is a 30-year fixed mortgage.
What does that mean?
Well, when I say that it is fixed, this means that the interest rate does not change.
This means that it doesn't go up. even if other interest rates go up throughout the economy.
So this is a fixed rate mortgage.
And then 30 year just refers to the amount of time you will have to pay back that amount of money.
So the standard mortgage in the US is a 30-year fixed mortgage.
So this is not the common type of mortgage that most people have in other countries.
So this is why I said that this is pretty unique to the US.
So this is what many, many people have when they buy a house here.
However, some people have an adjustable rate mortgage.
And as you can probably guess, this just means that the interest rate can change over time.
So if interest rates go up later on, then your adjustable rate mortgage might also go up as well.
Your interest rate might increase in the future.
So, as you can imagine, this is a very different type of agreement when it comes to finding a mortgage, finding someone that will lend this money to you.
It's very different if you have a 30-year fixed mortgage or if you have an adjustable rate mortgage.
And you can also get a mortgage that isn't 30 years.
There are also some other timelines that also exist.
But these 30-year fixed mortgages are very common.
So, when you're looking to buy a house in the US, usually you'll get pre-approved for a mortgage.
This just means that a lender conducts an investigation to see if they are likely to lend you this money, if they're likely to give you this mortgage, and once they've decided that they will probably be able to lend you this money, they will pre-approve you.
And so what that does is it shows that you are a qualified buyer.
So when you go to look for different properties, when you are looking at different houses that you might buy, you can show the seller of the house that you've been pre-approved.
This means that you are a qualified buyer.
You're someone who will most likely be able to get a mortgage to buy the house.
So this is important, because sellers don't want to waste their time with someone who isn't likely to even have the money to buy the house right.
So getting pre-approved for a mortgage is usually one of the steps in the process of buying a house.
And then after that, you can find the right lender.
When a lender pre-approves you, that doesn't mean that you have to get the money from them.
You can find another lender afterwards.
So you can find the right lender for you, based on your situation and the type of mortgage that you want.
You find a lender who will lend you the money.
And you will probably also work with a real estate agent.
So real estate agents help you through the whole process of buying a home or selling a home if you're the seller.
So you can use a real estate agent to help you out, because they have a lot of knowledge of of the local market.
So they know much more than you do, probably, about the housing market in your city.
So that's a huge advantage.
And they can represent you during the negotiation process.
That's also really important.
And they can help you with the paperwork and all of that other stuff, right?
So a lot of people choose to work with a real estate agent because it ends up being very helpful.
But of course, it costs money.
You're gonna pay for this, obviously.
So that's something that you need to keep in mind.
In English, when we say that you keep something in mind, this just means that you don't forget this right.
You remember this as something something potentially important.
So it's important to keep that in mind because that's another fee that you'll have to pay.
A fee is just an amount of money that you have to pay for something, some service or something like that.
So of course it costs money.
You'll have to pay a fee for a real estate agent.
So once you've found a house that you really want, it's time to make an offer.
So once the seller accepts your offer, then you've kind of come to an agreement on how much money you want to pay for the house, and the seller agrees to that amount and you have a deal, so to say.
However, it's not over yet, because after that, there's usually an appraisal.
So what happens is, in this case, the lender, who's gonna lend you money, your mortgage right to buy the house.
They want to make sure that the property value is in line with the amount of money that they're gonna lend you.
In English, when we say that something is in line with something else, we're saying that it matches or it agrees with something else.
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So they want to make sure the value, the valuation of this house that you want to buy, is actually similar to the amount that they're gonna lend you.
So they're gonna do that and then there will probably also be an inspection.
This is to identify any issues with the home.
So imagine that that you buy a home and then afterwards you realize that it has a bunch of problems that you didn't even know about.
That would not be good.
So, this inspection will shed light on any problems with the home.
In English, when we say that something sheds light on something else, This just means that it reveals it.
It helps you see this.
Right.
So that's also something that's really important, so that you can see what issues there are with the home and make sure you're not overpaying for a home that potentially has a lot of problems.
So these things the appraisal, the inspection these are some of the closing costs of buying a house.
Closing costs are different fees that you have to pay for different things when you buy a house.
These are some of those fees, but there are other ones as well.
So that's another thing to keep in mind that you are going to have closing costs when you buy a house.
So there are a lot of things, a lot of fees, a lot of money that is kind of hidden, that you'll have to pay when you buy a house in the US.
And so, how much do houses cost nowadays in the US?
This varies dramatically depending on where you are.
There's no such thing as the American housing market, right?
There are only local housing markets.
So the San Diego housing market, where I live, is a completely different market from the housing market in Nashville Tennessee, for example.
Those are two different markets that are largely unrelated right.
So when we talk about prices of houses, it's going to be very different depending on where you are, which housing market you're talking about.
So for example, the median home price in the US.
The word median refers to a way of determining the average of something.
That's just one way of determining an average.
There are other ways, but in this case, I'll refer to the median home price.
The median home price in the US right now is is about $416,000.
So that is taking into account all of the homes in all of the different cities and states of the US.
However, in San Diego, where I live, the median home price right now is between 900000 and 1000000.
That is a huge difference between the median home price in the US and just San Diego in particular.
So imagine that right now in San Diego normal homes are selling for over 900000 or a million dollars.
That's a normal price for a home.
That's kind of an average price.
So this can give you an idea of how expensive it is to live in a place like southern california.
It is very, very expensive.
Okay, i imagine that some of you are thinking that that's crazy, that people would buy a house for a million dollars and it's just a normal house.
It's not a mansion, but that's typical nowadays in Southern California.
So it's a lot of money.
And lastly, what are some of the hidden fees of home ownership?
When you own a home after you've already bought it.
What are some of the things that you have to pay for that might not be obvious.
Well, we have property tax in different places in the US.
So you have to pay tax just because you own a property.
I'm sure a lot of you are familiar with this.
There might be something similar where you live.
And this is different in different areas.
But that's one thing.
Another thing is homeowner's insurance.
So this will cover damage to your property and to your belongings in case something happens to your house.
So a lot of people need to pay this homeowners insurance to have coverage for their house.
So that's another thing.
And another fee is the HOA fee.
HOA stands for homeowners association.
So, some houses are part of an HOA.
This is an association that is self-governing.
It's not part of the government or anything.
The people govern this themselves, people who live there in that area.
And what this association does is that it takes care of the maintenance of the neighborhood, the repairs, the amenities and other things like that.
It maintains and repairs and keeps all of this in good order, but it also enforces rules.
Like, for example, maybe where you live you can only paint your house a certain color, for example a certain few colors.
And if you violate that rule, you're going to get in trouble, right?
Things like that.
There are rules that you need to follow if you're part of an HOA.
And if you don't follow these rules, they can actually do some pretty bad things to you and maybe even take you to court if you don't follow these rules.
So this is another thing that you have to think about, because you need to pay fees to this association.
Right.
So that's another fee.
And then, of course, just the normal repairs that you have to make.
That's another fee landscaping.
That's another fee.
So it costs a lot of money to own a home even after you've bought it.
All right, why don't we stop there for today?
I hope you learned a little bit from this episode.
Remember that you can become a Listening Time family member if you want my advanced episodes.
And remember to check out my ebook if you're a Spanish or a Portuguese speaker.
All those links are in the episode description below this episode.
All right, thank you for listening to this episode and I'll talk to you on the next episode of Listening Time.
