Chapter 5: Section 3

the renter's

A landlord usually needs whose permission before entering the apartment?

Withhold that amount of rent

A tenant has the right to pay for repairs if the landlord fails to do so and and what?

- provides significant income tax benefits - houses build up equity

Advantages of buying a house:

- no maintenance costs - no huge down payment - no real estate taxes - greater mobility

Advantages of renting an apartment:

1/3

As a general rule, no more than this amount of your total income should go toward your mortgage payment.

- Confession-of-judgement clause - Inability-to-sue clause - Arbitrary clause

Avoid these types of clauses:

- title search - legal costs - loan application - credit report - house inspections - taxes

Closing costs include:

- Down payment - Mortgage payments - Closing costs - Points - Property taxes - Homeowner's insurance - Mortgage insurance - Utilities and upkeep

Costs to consider when buying a house:

- substantial down payment - maintenance costs - real estate taxes

Disadvantages of buying a house:

Closing costs

Fees involved in arranging for a mortgage or in transferring ownership of property

Points

Fees paid to the lender and computed as a percentage of a loan.

Security deposit

Funds a renter lets an owner hold in case the rent is not paid or the apartment is damaged

1-3 years

How long do most leases last?

1-4

How many points do lenders normally charge?

1/4-1/3

How much income does the average American family spend on housing?

one month's rent

How much is the security deposit usually worth?

- List of appliances that come with the apartment - Apartment community facilities promised and whether or not you must pay extra - Any other promises (Ex: painting) - The right to cancel your lease if you are transferred to a job (Usually have to pay a certain amount to do this) - Right to put in lighting fixtures, shelves, etc. and have them remain your property when you move

If possible, add these clauses to your lease:

subprime mortgage

If you do not have a good credit rating, you may be forced into this type of mortgage. With this type of mortgage you pay a higher interest rate than people with prime mortgages.

heat

Landlords must makes sure their apartments have certain minimum services such as...

safety laws

Landlords must obey what?

Lease

Long-term agreement describing the terms under which property is rented

make a profit

Points are used when lenders believe that the current interest rate is not high enough to pay the expenses involved in handling the mortgage and still ...

- paying the rent on time - taking care of the property - notifying the landlord if repairs are needed

Tenant's responsibilities:

privacy

Tenants have the right to what?

the condition of the apartment

The amount of the security deposit returned depends on what?

Mortgage

The installment debt that you take on when you buy a house or other piece of property.

Confession-of-judgement clause

The lawyer for the rental owner has the right to plead guilty for you in court if the owner thinks his or her rights have been violated. With this clause - illegal in some states - you are admitting guilt before committing any act.

Arbitrary clause

The owner has the right to cancel the lease because he or she is dissatisfied with your behavior.

1. Neighborhood 2. Housing market at the time

The value of the house depends on what two factors?

families with subprime mortgages could not make the payments

Trouble with the U.S. economy in the 2000's was because...

True

True or False: Houses appreciate in value.

False

True or False: Once you look at one lender, he or she is your only option.

True

True or False: You can negotiate points with the lender.

False

True or False: Young adults usually buy a house rather than renting a small house or an apartment.

security deposit and one or two month's rent

What is required when renting an apartment?

mobility

When buying you give up the freedom of easy ________.

To attract home buyers

When interest rates are up, some lenders will waive points, why?

More

Will a 6 month or 9 month lease cost more or less than a 1-3 year lease?

Inability-to-sue clause

You give up your right to sue the owner if you suffer injury or damage through some fault of the owner, such as neglected repair work.

equity

the market value of the property minus the mortgage amount still owed