House Hunting Finding your own place is exciting, but it is also a big responsibility. What are some costs associated with renting or buying a home?

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House Hunting Finding your own place is exciting, but it is also a big responsibility. What are some costs associated with renting or buying a home?

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Presentation transcript:

House Hunting Finding your own place is exciting, but it is also a big responsibility. What are some costs associated with renting or buying a home?

Lesson Objective Compute the total housing cost and compare it with suggested guidelines. Content Vocabulary utility costs Public services, such as telephone, electricity, water, and gas.

Other Housing Costs Your total monthly housing costs should be less than 35% of your monthly gross pay.

Sue and Paul Kwan have a combined monthly take-home pay of $3,320. The list of their expenses for May is shown in Figure 10.7 below. Were their housing costs for May within the FHA guidelines of less than 35 percent of their take-home pay? Example 1

Figure 10.7

Find the total monthly cost. Sum of expenses = $1, Example 1 Answer: Step 1

Find the recommended maximum. $3, × 35% = $1, Example 1 Answer: Step 2

Compare: Is the total monthly cost less than the recommended maximum? Is $1, less than $1,162.00? No, the Kwan’s are not within the guidelines. Example 1 Answer: Step 3

Juaquin and Maria Eloyza have a combined monthly net income of $4,928. The following is a list of their housing expenses for the month of April: Mortgage payment, $846; insurance, $31; taxes, $210; electricity, $67; phone, $55; cable TV, $21.95, Internet service; $38; fuel, $55; water, $29.43; washing machine installment payment, $45; repairs, $ Practice 1

Find the total monthly housing cost. Is it within the FHA guidelines? Practice 1 (cont.)

FHA recommendation: 4928(.35) = $1, Total monthly housing cost: = $1, Is it within the FHA guidelines? No. Practice 1 Answer

Marcus and Shonda Olson have a combined monthly net income of $6,125. Their monthly housing expenses for September are as follows: mortgage payment, $931; insurance, $38.77; taxes, $397; electricity, $118.55; gas heat, $32.87; water, $40.28; garbage pick-up, $15.30; telephone, $31.18; cable TV service, $69.95; cell phone, $39.73; new lawn edger, $79.95; air conditioner repair, $ What is their total housing cost for September? Is it within the FHA recommendation? Practice 2

FHA recommendation: $2, Total housing cost for September: $1, Is it within the FHA recommendation? Yes. Practice 2 Answer