Chapter 9 - The housing decision factors and finances
Closing Costs
Settlement costs - The fees and charge paid when a real estate transaction is completed
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
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