1. 1 Personal Finance 6.03 Understand options and practices for meeting housing needs.

2. 2 Essential Questions What are the options for meeting housing needs? What are advantages/disadvantages of renting and things to look for before signing a lease? What are advantages/disadvantages of buying and procedures in buying a home?

3. 3 Review Info Renting a Place to Live Buying a Home –Handouts Available!

4. 4 My Dream Home — Journal Entry You have just landed your first real job in an area where you have always wanted to live. Think about the type of housing you will need, then think about things you would like to have, but could live without. Use the Internet and locate three types of housing that fit your needs and, hopefully, some of your wants as well. Create in Word - Print

5. 5 Intro The four major expenditure areas for individuals and families include housing, transportation, insurance and food. Of these four, housing is the largest. There are many housing options to choose from, starting with the decision to rent or buy. 90% of households headed by persons younger than 25 years old rent their homes.

6. 6 How to Locate a Living Space Handout Available

7. 7 Needs and Wants Amenities include heat, electricity, garbage, water and other features like Internet and telephone. A landlord is a person who owns the rental unit. A tenant, or renter, is the one who rents the property.

8. 8 Determining Housing Costs Spending plan is a financial statement individuals use to assist in money management and aids in tracking income and expenses. Rent is a payment made in exchange for occupying another’s land or property. A property manager is a person who works for the owner in regards to finding and screening tenants, collects rent, maintains and secures the property, and responds to tenants’ needs.

9. 9 Determining Housing Costs A security deposit is money paid in advance of moving into a living space to the landlord to be used for repairs and damages beyond normal wear and tear.

10. 10 Housing Options Houses– Single housing units usually surrounded by a yard and varying in size Apartments– Sets of rooms on one floor of a building used as separate residence spaces Studio apartments– Usually one room with a separate space for the kitchen and bathroom Mobile homes– A manufactured home that is capable of being moved from one location to another

11. 11 Housing Options Condominiums– A single apartment in a multiple housing structure that can contain multiple stories, garages, yards, and other amenities Duplexes– Two apartments that are like two separate houses situated side by side Rooms– Private rooms located within another structure such as a house, hotel, or other facility Residence halls– Usually located on a college or university campuses, include shared or single rooms and are usually available for school terms only to attending students

12. 12 Locating a Living Space Friends and family members– If in the area you wish to inhabit Newspaper classifieds– Obtain these as soon as possible from the newspaper. An individual has increased opportunities and chances to get the living space they want when the respond quickly to these ads Bulletin boards– Many home owners and property managers post listings this way Internet– Great way to start a search from a distant location, many large cities have search sites

13. 13 Locating a Living Space Yellow pages– Search under “Apartment Rentals” and call apartment management or property management offices Local Chamber of Commerce– A valuable resource when relocating Rental agencies/real estate agencies– Hold postings for rentals In front of the living space– Owners often post a sign when spaces are available

14. 14 Reading an Ad for a Living Space BR– Bedroom BA–Bathroom W/D–Washer/Dryer (there may be machines or hookups) DW–Dishwasher NS– No Smoking NP– No pets (may be negotiable-you may pay more) F/P– Fireplace AC– Air conditioner W/S/G– Water, Sewer, and Garbage

15. © Family Economics & Financial Education – Revised November 2004 – Housing Unit – Renting vs. Owning a Home – Slide 15 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 15 How to Locate A Living Space

16. 1.9.2.G1 © Family Economics & Financial Education – Revised November 2004 – Housing Unit – Renting vs. Owning a Home – Slide 16 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 16 Introduction Needs and Wants Determining Housing Costs Housing Options Locating a Living Space Reading an Ad for a Living Space Rental Search Checklist Completing an Application form

17. 1.9.2.G1 © Family Economics & Financial Education – Revised November 2004 – Housing Unit – Renting vs. Owning a Home – Slide 17 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 17 Needs and Wants Space Location Amenities Parking Miscellaneous

18. 1.9.2.G1 © Family Economics & Financial Education – Revised November 2004 – Housing Unit – Renting vs. Owning a Home – Slide 18 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 18 Space How many rooms are needed? Will there be roommates? Monthly charges are typically more affordable when people share the cost Size of the rooms (total square feet) Number of bathrooms Garage What is the size of the garage? Storage Space Yard

19. 1.9.2.G1 © Family Economics & Financial Education – Revised November 2004 – Housing Unit – Renting vs. Owning a Home – Slide 19 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 19 Location Distance from work, schools, shopping, laundromat Consider the walking/biking distance from school or work Minimize transportation expenses Neighborhood Safety Quality of schools, streets, and homes Presence of police, fire, and emergency services Geographic location Urban vs. rural

20. 1.9.2.G1 © Family Economics & Financial Education – Revised November 2004 – Housing Unit – Renting vs. Owning a Home – Slide 20 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 20 Amenities Amenities include utilities like heat, electricity, garbage, water, and other features like Internet and telephone service Heat- Examples include electric, gas, and radiant Different heating sources cost different amounts of money Power- Examples include solar, gas, electric, and wind Different power sources cost different amounts of money and have different affects on the environment Who is responsible for paying each bill? Landlord is the person who owns the rental unit Tenant, or renter, is the one who rents the property

21. 1.9.2.G1 © Family Economics & Financial Education – Revised November 2004 – Housing Unit – Renting vs. Owning a Home – Slide 21 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 21 Parking Location/size Number of vehicles allowed (for self and guests) Permits needed

22. 1.9.2.G1 © Family Economics & Financial Education – Revised November 2004 – Housing Unit – Renting vs. Owning a Home – Slide 22 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 22 Miscellaneous Washer and dryer Are hookups or machines provided? Dishwasher Are hookups or machines provided? Smoking Pets Fireplace Hot tub Snow removal and lawn maintenance

23. 1.9.2.G1 © Family Economics & Financial Education – Revised November 2004 – Housing Unit – Renting vs. Owning a Home – Slide 23 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 23 Determining Housing Costs Important to choose a rental unit one can afford Create a spending plan Spending plan is a financial statement used to assist in money management and track income and expenses Based on this, determine what can be spent on rent and amenities Rent is the payment made in exchange for occupying another’s land or property, usually paid to landlord or property manager Property manager is a person who works for the owner to find/screen tenants, collect rent, maintain property, and respond to tenants’ needs

24. 1.9.2.G1 © Family Economics & Financial Education – Revised November 2004 – Housing Unit – Renting vs. Owning a Home – Slide 24 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 24 Housing Costs continued General rule: Households should spend 30% or less of their net income on housing, not including amenities Things to keep in mind when determining costs: Determine maximum monthly amount (including amenities) you can afford and stay below that Compare the costs of living spaces One space may not include amenities in the rent, where another space will. Add in expected costs to compare the two

25. 1.9.2.G1 © Family Economics & Financial Education – Revised November 2004 – Housing Unit – Renting vs. Owning a Home – Slide 25 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 25 Housing Costs continued Compare one time costs, like security deposits Security deposit is money paid in advance of moving in to be used for repairs beyond normal wear and tear

26. 1.9.2.G1 © Family Economics & Financial Education – Revised November 2004 – Housing Unit – Renting vs. Owning a Home – Slide 26 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 26 Housing Options Houses-Single housing units usually surrounded by a yard, varying in size Apartments-Sets of rooms on one floor or a building used as separate residence spaces Studio apartments-Usually one room with separate space for kitchen and bathroom Mobile homes-Manufactured house that is capable of being moved

27. 1.9.2.G1 © Family Economics & Financial Education – Revised November 2004 – Housing Unit – Renting vs. Owning a Home – Slide 27 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 27 Housing Options Continued Condominiums-Single apartment in a multiple housing structure, that can contain multiple stories, garages, and yards Duplexes-Two apartments, situated side-by-side Rooms-Private rooms located within another structure Residence halls-Usually located on college or university campuses and available for attending students

28. 1.9.2.G1 © Family Economics & Financial Education – Revised November 2004 – Housing Unit – Renting vs. Owning a Home – Slide 28 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 28 Locating a Living Space Friends and family members- If in the area you wish to inhabit Newspaper Classifieds-Obtain these through newspapers as soon as possible for increased opportunities for the living space you want Bulletin boards-Homeowners and property managers post listings this way Internet-Great way to start searches from distant locations

29. 1.9.2.G1 © Family Economics & Financial Education – Revised November 2004 – Housing Unit – Renting vs. Owning a Home – Slide 29 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 29 Locating a Living Space Continued Yellow pages- Search under “Apartment Rentals” and call apartment or property management offices Local Chamber of Commerce- Valuable resource when relocating Rental agencies/real estate agencies- Hold postings for rental spaces In front of living space- Owners often post a sign when spaces are available

30. 1.9.2.G1 © Family Economics & Financial Education – Revised November 2004 – Housing Unit – Renting vs. Owning a Home – Slide 30 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 30 Reading an Advertisement For a living Space Abbreviations are often used in advertisements for living spaces BR-Bedroom BA-Bathroom W/D-Washer/Dryer (may be hookups or machines) DW-Dishwasher

31. 1.9.2.G1 © Family Economics & Financial Education – Revised November 2004 – Housing Unit – Renting vs. Owning a Home – Slide 31 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 31 Reading an Advertisement Continued NS- No smoking NP- No pets (may be negotiable-you may pay more if you have pets) F/P-Fireplace AC- Air conditioner W/S/G-Water, Sewer, and Garbage

32. 1.9.2.G1 © Family Economics & Financial Education – Revised November 2004 – Housing Unit – Renting vs. Owning a Home – Slide 32 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 32 Rental Search Checklist Helpful to take a checklist while walking through rental units Makes it easy to remember what was liked and disliked from place to place May be difficult if one is not able to take a walk through A person may be able to take a virtual tour and use the checklist

33. 1.9.2.G1 © Family Economics & Financial Education – Revised November 2004 – Housing Unit – Renting vs. Owning a Home – Slide 33 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 33 Completing an Application Form If an individual locates a living space they would like to rent, they should complete an application form An application form is a document used to determine if a person’s credit history, financial stability, and references make them a worthy candidate All information on this form should be truthful, factual, and answered completely

34. 1.9.2.G1 © Family Economics & Financial Education – Revised November 2004 – Housing Unit – Renting vs. Owning a Home – Slide 34 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 34 Application Form continued Before returning the application, a person should ask some questions: Is there an application fee? If there is a fee, how much is it? Will this fee be returned if the application is denied?

35. 1.9.2.G1 © Family Economics & Financial Education – Revised November 2004 – Housing Unit – Renting vs. Owning a Home – Slide 35 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 35 Conclusion Prioritize needs and wants Determine housing costs Locate a living space Get ready to move in!

36. 36 Journal Entry Case Study: Mr. and Mrs. Brown have one child, a five-year-old boy. They are expecting another child, a girl, in three months. Mr. Brown has taken a new job in another state. He will be in a position to entertain at home, and likes to jog in the afternoons and on weekends. Mrs. Brown runs a small craft business from her home that she wishes to continue. They have two cars and need space for the five- year-old to play. They want to live in an area close to schools and, possibly, a park or recreation area. What type of housing would fit their NEEDS and WANTS?

37. 37 Activity Complete –How to Locate a Living Space –Terms Involved in Renting Class –Reading Living Space Advertisements

38. 38 Renting vs. Owing a Home Handout Available

39. 39 Journal Entry Draw a T in your Journal. On the Right side list reasons why people would own a home. On the Left side list reasons why people would rent a home.

40. Renting vs. Owning Family Economics and Financial Education Take Charge of your Finances

41. 1.9.3.G1 © Family Economics & Financial Education – Revised March 2009 – Housing Unit – Renting vs. Owning a Home Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Introduction Housing is the largest personal expenditure. – About 1/3 of a person’s income. Choosing where to live is based upon a person’s goals, values, needs, and wants. Places to live include: – House, apartment, condo, mobile home, etc.

42. 1.9.3.G1 © Family Economics & Financial Education – Revised March 2009 – Housing Unit – Renting vs. Owning a Home Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Reasons for making a housing choice Personal and financial goals Personal values, needs, and wants Amount of money available for housing costs Financial resources and readiness Credit history Real estate prices Location preference Expected length of stay in particular place

43. 1.9.3.G1 © Family Economics & Financial Education – Revised March 2009 – Housing Unit – Renting vs. Owning a Home Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Costs of renting Monthly rent Security deposit Utilities – electricity, water, garbage, etc. Renter’s insurance

44. 1.9.3.G1 © Family Economics & Financial Education – Revised March 2009 – Housing Unit – Renting vs. Owning a Home Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Renting A lease is a legal contract between the tenant and the landlord, specifying the responsibilities and rights of both parties. – Identifies the rent amount, security deposit amount and specifications, payment for utility bills, late payment penalties, length of lease, eviction terms, etc. – This is between the landlord and the tenant Landlord – Owner of the rental property. – May perform management duties or hire a property manager. Property manager - may charge a fee to the landlord to perform the management task – Duties may include: – May collect rent and deposits, pay utility bills, complete repairs and maintenance, watch over the property, respond to tenant complaints, assign new tenants, etc.

45. 1.9.3.G1 © Family Economics & Financial Education – Revised March 2009 – Housing Unit – Renting vs. Owning a Home Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Renting continued Tenant (renter) – The person who rents the property. Renters are generally – People who choose not to own a home. – People who cannot afford to own a home. The tenant pays rent to the landlord which allows them to live in the rental property. – Rent The cost of using someone else’s property.

46. 1.9.3.G1 © Family Economics & Financial Education – Revised March 2009 – Housing Unit – Renting vs. Owning a Home Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Moving into a rental Upon moving into a new place, people are usually required to pay a security deposit and sign a lease. Security deposit – An advance payment to cover anything beyond normal wear and tear on the unit.

47. 1.9.3.G1 © Family Economics & Financial Education – Revised March 2009 – Housing Unit – Renting vs. Owning a Home Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Advantages of renting Low move-in costs Fixed monthly expenses Easy to move Location choices (may be close to work or school) Less maintenance and repair work Fewer responsibilities May offer extra amenities such as a tennis court or pool Typically less expensive than home ownership May be able to save for other wants or needs if renting a less expensive apartment Other expenses may be included in rent payment such as electricity, water, sewer, and/or garbage

48. 1.9.3.G1 © Family Economics & Financial Education – Revised March 2009 – Housing Unit – Renting vs. Owning a Home Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Disadvantages of renting Subject to terms of a lease Rent may change with little notice Less privacy and transient neighbors. Restrictions on noise level, pets, etc. Fewer opportunities to upgrade apartment such as new carpet, paint, or wallpaper. When leaving a property, no equity is returned as it would be if selling a home. No tax deductions May lose rental if the property is sold.

49. 1.9.3.G1 © Family Economics & Financial Education – Revised March 2009 – Housing Unit – Renting vs. Owning a Home Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Costs of ownership Monthly mortgage payments Down payment (one time cost) Closing costs (one time cost) Utilities – electricity, water, garbage, etc. Homeowner’s insurance Real estate property taxes Maintenance

50. 1.9.3.G1 © Family Economics & Financial Education – Revised March 2009 – Housing Unit – Renting vs. Owning a Home Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Home ownership Home ownership - the buyer has purchased a housing unit as property – Goal of many Americans – A large financial decision Owning a home is an investment because if a person sells a home for more than what it was bought for, the person makes money. This is called equity. Financial planning and savings can assist a person in planning for the benefits of home ownership later in life.

51. 1.9.3.G1 © Family Economics & Financial Education – Revised March 2009 – Housing Unit – Renting vs. Owning a Home Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Purchasing a home 90% of buyers take out a mortgage – A home loan in which the real estate is the collateral – Collateral is an item promised to the lender if the borrower does not pay back the loan, usually the home. Down payment – Amount of money paid on the home at time of purchase – Typically 10 – 20% of the purchase price of the home Recommended purchase price amount an individual should pay for a home – 2 ½ times their annual household income

52. 1.9.3.G1 © Family Economics & Financial Education – Revised March 2009 – Housing Unit – Renting vs. Owning a Home Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Advantages of ownership Build equity which can be borrowed against if necessary Pride of ownership Feel more comfortable and have more privacy Stable mortgage payments More room and storage Improvement of buyer’s credit rating Income tax deductions for property taxes and mortgage interest Potential for property to increase in value Free to make home improvements and have pets (items typically not allowed in rentals)

53. 1.9.3.G1 © Family Economics & Financial Education – Revised March 2009 – Housing Unit – Renting vs. Owning a Home Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Disadvantages of ownership Large down payment Move-in costs Insurance costs Possible for property to decrease in value Time, money, and energy commitment Repair and maintenance costs Property taxes can raise substantially Money is tied up in the home May take several months to sell a home if trying to relocate

54. 1.9.3.G1 © Family Economics & Financial Education – Revised March 2009 – Housing Unit – Renting vs. Owning a Home Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Keep In mind... People are always paying for a home. It’s just a matter of whether it is for themselves or their landlord.

55. 1.9.3.G1 © Family Economics & Financial Education – Revised March 2009 – Housing Unit – Renting vs. Owning a Home Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Activity Complete: – Renting vs. Owning A Home-P7 – Renting vs. Owning A Home-P8

56. 56 Activity Make a Math-to-Life Connection Complete Appendix 6.03G, “Deposit and Interest.”

57. 57 Popcorn Review in Journal Summarize what YOU have learned from this objective study that YOU think will most benefit YOU when YOU begin to live on YOUR own.