Housing Legal and Financial Decisions.

Lease Lease – Legal document between the owner of the property and the person wishing to occupy the property. Includes length of the lease, address of the property and monthly rental cost. The terms of the lease cannot change until the lease has expired. The rent cannot be raised until the lease is over.

If the terms of the lease are not met by the renter they can be evicted. Not paying rent Extensive damage to the property Having pets when the contract says the cannot. Breach of Contract – not doing what you agreed to the contract. Lease

Assigning a Lease If the owner agrees, a lease can be assigned to another party. Releases obligations of original leaser from liability for remainder of lease. Subletting is when a renter allows someone to live in their rental for a specific amount of time but the persons name on the lease is still liable.

Insurance Financial protection or reimbursement against losses (fire, flood, damage or theft) from an insurance company. Home Owners Insurance – Covers the house, the land and the belongings on the property. Renters Insurance – Covers the belongings of the renter inside the property.

Credit Report A report which gives the financial history of a person. Includes payments made on time, late and payments not made. Before a person can purchase a home or sign a lease a credit check is usually done.

Application Before you can rent a home you must: Fill out an application - personal information Pay an application fee – this ensures the applicant is serious about the home. Credit check – to check payment history Advance on Rent – Paying the first and last months rent.

Owner/Landlord The owner has some legal responsibilities to renters: Keeping the apartment in good shape Making structural repairs Repairing appliances, plumbing, heating and cooling

Renters The renter has responsibilities to the owners: Pay rent on time Take care of the home Follow the terms of the lease

Utilities Utilities – electricity, water and sewer may not be included in the rent. Renters may have to pay these separately.

Rental Payments? How much rent can you afford? Standard is 28%. Example – Income = $2100 Rent = $2100 X 28% = $588

Do the Math Income is $1,900 month 28%.

Payments to landlord How much do you need to pay to rent a home? First Months Rent: $650 Security Deposit: $250 Pet Deposit: $250 Total Due:$1150

Do the Math First Months Rent: $800 Security Deposit: $200 Pet Deposit: $100 Total Due:$ How much do you need to pay to rent a home?

Buying a Home Mortgage – Loan given to qualified buyers to purchase a home

Buying a Home FHA Loan Program – Guarantees mortgages for people with low to moderate credit ratings. VA Loan – Veterans Administration Loan – A loan available to military personal. Conventional Loan- Pay a fixed interest rate for years (length of loan). Your loan payment does not change.

Buying a Home Agreement of Sale – A contract between a buyer and a seller agreeing to certain terms to purchase a home. Earnest Money- the money given to the realtor to show interest in purchasing a house. Origination Fee – Monies paid to the bank to process the loan.

How much can you afford? 2 ½ times total annual income Annual Income: $60,000 2 ½ times annual income: $150,000 You can afford a home selling for $150,000.

Do the Math How much home can you afford? Annual Income: $120,000 2 ½ times annual income: You can afford a home selling for:

How much can you afford? Monthly Payment 28% total monthly income Monthly Income: $4,200 28% if Monthly Income: $1,176

Do the Math How much can you afford? Monthly Payment 28% total monthly income Monthly Income: $4,100 Payment:

Down Payment Home Price: $110,000 Down payment: 5% 110,000 X 5% = $5,500

Do the Math Down Payment Home Price: $150,000 Down payment: 5% =

Before You Buy Inspections – Professional come to the home to insure the home is a good purchase. General Home Inspection – checks the foundation, roof and electrical systems to ensure they meet code. Termite Inspection: checks the foundation for damage from termites.

Before You Buy Title Search - a search to make sure the seller actually owned the property and no one else had a claim to that property. Appraisal - an evaluation of the property that determines the value of the property.

Equity The portion of the value of the home an person owns. A mortgage is a loan on a home – the mortgage is owned by the bank. Value of the home is $200,000 The Mortgage is $100,000 So the Equity is $100,000 the portion the homeowner owns.

Do the Math – Equity Value of the home is $250,000 The Mortgage is $125,000 Equity=