Chapter 9 - The housing decision factors and finances

Main factor to consider when refinancing a loan at a lower rate?

Cost of refinancing versus the benefits (Savings) of lower monthly payments.

Common sources of home mortgages

Credit unions Banks Savings and loans Mortgage companies

Why are initial costs of renting lower in the short run?

1. No major repair costs 2. No down payment 3. No closing costs

How could the tax benefit and risk of a home equity loan be best described?

Interest is tax deductible, but default could mean foreclosure.

Apartment location factors

Schools & Shopping options

Roles of real estate agent

Screen applicants to see if they qualify for a mortgage

Closing Costs

Settlement costs - The fees and charge paid when a real estate transaction is completed

To determine how much you can spend on a home, have a loan officer at a mortgage company or other financial institutions to

prequalify you

Mortgage application sequence steps

1. Complete application 2. Meet with lender, evidence of job and income 3. Lender gets credit report, confirms financial aspects 4. Mortgage is approved or denied

Disadvantages of owning a used home

1. limited mobility 2. Possibility of significant repairs 3. Significant financial commitment

Calculating Housing Costs

AGI = 72,000 Insurance = 100$ Tax, Rent, Housing costs = ? 72,000/12 = 6000 * .33 = 1980 1980 - 100 = 1880

3 Important factors to evaluating school systems

Achievement level of students Program variety School funding

Disadvantages of renting a house or apartment?

Cant remodel No tax benefits

Factors which impact the amount you can spend on a home

Current mortgage payments, the size of the down payment you can make, and your income.

Which of the following are benefits of home ownership?

Income tax deduction and mortgage interest Ability to borrow on the equity build-up Income tax destructibility of home repairs

Advantages of renting an apartment

Less maintenance than owning Easier to move

Exterior construction

Material quality and condition of building Construction and condition of foundation Condition of bricks, wood, or other siding Condition and quality of windows Condition and quality of roof and gutters Type and condition of chimney

Disadvantages of owning a condo

Monthly fees Less privacy Uncertain demand affecting property value

Exterior facilities

Neighborhood appearance Condition of streets & Sidewalks Location of street lights Quality of landscaping Outdoor lighting Driveway/Garage quality Condition of patio or porch Appropriate drainage system

The tenant is protected by rental increases during the lease term unless the lease contains a

provision allowing for increases.

Before signing a lease

1. Verify starting date 2. Talk to a lawyer about unclear aspects of the lease 3. Note in writing the move-in condition

Common trade-offs to buying a house

Time, Money, Effort