Housing: A Place To Call Home Chapter 13 Housing: A Place To Call Home

Dorm

Building with rooms that colleges rent to students at reasonable prices, usually in large complexes. Often two or more students share a room Room rates usually include meals in a cafeteria. DORM

Efficiency Apartment (Studio)

Efficiency Apartment (Studio) Smallest and least expensive type of apartment. Consists of one room that serves as the living area, bedroom, and kitchen, plus a bathroom. Separate bedrooms cost more Efficiency Apartment (Studio)

Duplex

Duplex An apartment in a building that houses two separate units. The rooms may be on two floors of the building. Gives you the feel of living in a house but with a lower cost. Duplex

Condominium Townhouse

A housing unit similar to an apartment that you own rather than rent. It is often more spacious than a typical rented apartment. Monthly association fee is usually required. Condo (Townhouse)

Mobile Home

A small house on wheels, designed so that owners may have it transported to a rented or purchased space….often in a mobile home community. You can buy a mobile home for as little as $20,000 Mobile Home

Buy or Rent?

Costs of Ownership Monthly mortgage payments Fixed ARM Down payment (one time cost) Closing costs (one time cost) Utilities – electricity, water, garbage, etc. Homeowner’s insurance Real estate property taxes Maintenance Costs of Ownership

Buying Advantages Disadvantages Ownership Value (Appreciation) Your own space (privacy) Fewer Restrictions Tax-deductible interest and property tax More room and storage Improves credit rating Down payment High Cost Property tax Restricted mobility (if wanting to sell) More responsibility Possible depreciation in value Buying

Costs of Renting Monthly rent Security deposit Utilities – electricity, water, garbage, etc. Renter’s insurance Association fees (sometimes) Costs of Renting

Renting Lower cost May be able to save for other expenses Advantages Disadvantages Lower cost May be able to save for other expenses Less responsibility Mobility Amenities No ownership More restrictions (noise levels, changes, pets) Shared Space Rent may change with little notice Fewer opportunities to upgrade Renting

A legal contract you sign that gives you the right to live in the apartment for a specific period of time as long as you pay the rent and follow the contract rules. Sample Lease Lease

Terms Of A Lease Length of time (6 months, 1 year, etc.) Rent amount and due date Amount due for security deposit Used to cover any damages or repairs that may need to be made. Pet restrictions Rules of conduct (noise levels) Landlord responsibility to make repairs Notice required before moving out Terms Of A Lease

Tenant The person renting the apartment. Before signing a lease, make sure you take pictures and document any damage or imperfections that you find so you will not be blamed when you move out! Tenant

The owner of the property Apartment House Townhouse Etc. Landlord

How to pay for your house -Mortgages

Mortgage A loan used to buy real estate The property is considered collateral If you do not repay your loan according to the terms of the mortgage, your property may be foreclosed and become the property of the lender. Other costs associated with home ownership Down payment, closing costs, property tax, home owners insurance, utilities, maintenance to house, etc. Mortgage

Property Tax Charged based on the value of your property Figured into mortgage cost This amount is held in a escrow account The lender pays your tax for you out of this account Property Tax

Mortgage Payment Included repayment of principal and interest Principal: the amount you borrow To qualify for most mortgages, you will have to make a down payment Usually this amount is between 10 and 20 % of the cost of the house. Mortgage Payment

Mortgage Payment If you buy a house that is $200,000 Down payment: $20,000*.10= $20,000 $20,000 *.20= $40,000 The down payment you would need to come up with will be anywhere between $20,000 – $40,000 The mortgage principal would be... $180,000 for a 10% down payment $160,000 for a 20% down payment Mortgage Payment

A collection of fees to cover costs related to your purchase. Appraiser to estimate the property’s value Title search to make sure property isn’t being used as collateral for another loan. Closing Costs

Types of Mortgages Fixed rate mortgages Charge the same interest rate for the entire term of the loan. Usually last from 15-30 years Adjustable-rate mortgages (ARM) Interest rates go up or down as other interest rates in the economy rise or fall. Contract specifies how often and by how much the rates can be adjusted. Types of Mortgages

Types of Mortgages FHA mortgage A loan insured by the Federal Housing Administration designed to reduce the down payment. First time home buyers can sometimes qualify Mortgage insurance is required to protect lender in this situation Types of Mortgages

Home-Buying Process Appreciate Equity An increase in value overtime. When selling a house, this is an opportunity to make a profit. Equity Difference between what the home is worth and what the buyer still owes on the mortgage. You can use equity in your home as collateral to borrow for other purposes. This is called a home equity loan. Home-Buying Process

When you have chosen a house you want, you make an offer. A proposal to buy the house for a stated price. You should always offer below the listed price! Your agent will present your offer to the seller, if the seller accepts your price... You have a deal. If they do not accept your price, they can make a counteroffer. A counteroffer will be higher than your offer, but lower than the listed price. Making an Offer

Once you and the seller agree on a price, you will need to make a deposit. The deposit is a small percentage (1-3%) of the purchase price. The deposit is called earnest money This is proof of your intention to buy at the agreed-upon price. If you change your mind, you forfeit your money to the seller...otherwise this amount becomes part of your down payment. Complete the deal

Apartment Search Use www.Hotpads.com to find a place to live! You can live by yourself or with someone else in class! You must have at least 2 bedrooms if you have a roommate Your budget for your apartment is 30% of your gross pay- in your life smart project! You need to find a cable plan, internet, and phone plan as well! Complete the Housing Page 10 of your Life Smart Project when you are finished Apartment Search