Real Estate Principles, 11th Edition By Charles F. Floyd and Marcus T. Allen

Home Purchase Decisions Chapter 15 Home Purchase Decisions

Rent or Buy Decisions See Table 15.1 The Mallorys’ Homeownership Decision Tax consequences of rent versus mortgage payments Alternative investments Inflation and deflation of home prices

Rent or Buy Decisions, cont. Impact of mortgage interest rates See Table 15.2 Mortgage Loan Repayment Schedule See Table 15.3 Impact of Interest Rates on a 30-year loan Period of ownership Generally the longer the period of ownership the greater return on the investment See Table 15.4 The Mallorys’ Rent-versus-Buy Analysis – Ten Year Ownership Period

Rent or Buy Decisions: Some Conclusions Economic decision depends on assumptions made Decision might rest on non-economic decisions as well

How Much House Can You Afford? Calculate income See Table 15.5 The Mallorys’ Estimated Monthly Income Calculate payments and apply qualifying ratios Calculate expenses See Table 15.6 The Mallorys’ Monthly Payments See Close-Up “Prequalified vs. Preapproved”

Choosing a Property Choosing an area Property taxes and quality of public services Recreational facilities Quality of school system Crime statistics Overall quality of the community

Choosing a Property, cont. Evaluating the individual home Attic Walls, ceilings and floors Roof Basement or crawl space Electrical system Mechanical systems Heating and cooling systems Water supply and waste disposal See Case Study “The House That Came Off the Mountain”

Making and Closing the Deal Real estate agents Negotiating the price Dealing with the lender Closing attorneys and escrow agents

Selling the Home Preparing the house for sale Setting the asking price Choosing a real estate agent The sale