Presentation on theme: "Major Expenditures: Housing"— Presentation transcript:
1 Major Expenditures: Housing Personal FinanceMrs. Bullock
2 Food, Transportation and Housing: Over 60% of Average Spending Source: 2011 Consumer Expenditure Survey
3 Housing: Largest Expense for Most ______________ vary greatlySize_____________AmenitiesChoose housing that fits your personal needsand ________________________
4 Renting a Home – Important Terms __________________Person who owns a property and chooses to allow others to live there for rent______________Price paid for the use of someone else’s property_________________Person who rents the property
5 What are common rental expenses? Costs of housing: Rent Payment and…..Where can you find a place to rent?_______________ (all or some may be included in rent)________________ (some may be furnished)__________________________________ – provides payment to renters to cover the damage and loss of property in addition to liability losses__________________ (internet, television, phone)___________OnlineFriends/FamilyBulletin BoardsProperty Management CompanyNews-paper
6 When Comparing Properties Make a list of _____________ vs. ____________ featuresIf possible, ____________ properties of interestKnow what you can _________ and calculate the total costUnderstand the ________________What are examples of essential vs. preferred features?
7 What types of questions would you ask when comparing rental properties? ___________ Costs______________Rent & Length of RentalHow much is rent?When is it due?What is the rental contract length?________Who is responsible for each bill?Amenities (furniture, pool, laundry, etc)What is available?Are there additional charges for usage?PoliciesWhat are the property features and restrictions - overnight guest and pet policies, parking, safety features?Repairs and maintenanceWho is responsible for the work and fees?________________What are the eviction terms?Landlord/Property Manager AccessWhat are my rights?
8 __________agreement (lease) ___________ specifying the tenant’s and landlord’s legal responsibilitiesMake sure all expenses and policies are clearly outlinedRental AgreementWhat types of questions does a landlord ask on a rental application?Who will be living at the propertyIncome/employment verificationRental historyReferencesCredit history checkDon’t pay any deposits or rent payments without a ________________________!Helps a landlord evaluate if they will rent to you
9 What initial expenses may be required to rent a property? One or both expenses may be required:___________________First and last month’s rent____________________Money paid to a landlord to cover cleaning costs and damage repairs beyond normal wear and tear
10 ______________________ a Home Real estate agent Licensed individual representing a buyer or seller in a ________________ transaction to purchase real propertyHelps buyers:__________ a property that addresses their needs and wantsFind a property that fits their ____________________Work through the contract and closing ____________________
11 Home Loan Most use __________ to purchase a home Lender evaluates many factors including:Credit historyIncomeNet worthIncome and expense statementMost use __________ to purchase a homeLender determines the maximum amount that can be borrowed and the credit ____________
12 What expenses are involved? Two Significant Initial ExpensesMortgage payments typically include:Cost of the home___________Funds to pay property taxesFunds to pay homeowners insurance________________________________________Portion of the purchase price not borrowedTypically 5-20% of purchase priceMortgage insurance – protects the lender if the borrower provides less than 20% down payment_________________Fees and charges associated with the purchase of a propertyTypically 1-4% of purchase priceMortgage: A _____________ to pay off the loan used to purchase housing
13 Purchasing a $250,000 HomeScenario 1: Down Payment 3.5% Interest Rate 30 Year Loan20% Down Payment5% Down PaymentDown Payment$50,000$12,500Monthly Mortgage Payment$1,158.51$1,326.90Total paid$417,062.18$477,683.21$8, paid for mortgage insurance!Scenario 2: Credit Score $50,000 Down Payment 30 Year Loan780 Credit Score720 Credit ScoreInterest3.3%3.5%Monthly Mortgage Payment$1,136.33$1,158.51Total paid$409,077.76$417,062.18$7,924.42Additional interest paidSource: mortgagecalculator.org
14 Home Ownership Expenses and Benefits to Net Worth Housing expenses:__________ – the monetary value of a property minus the amount owed___________UtilitiesHousehold FurnishingsSpecial ______________Homeowner’s Association DuesMaintenance and repairs_______________ (Internet, television, phone)Benefits of owningPride of ownership_____________Opportunity to build _________Risks of owningUnanticipated __________Property value may __________May be difficult to _________