1. Renting or Buying Housing Chapter 23-3

2. Choosing Housing Two important factors: Income and Location Income: ▫The housing you can afford depends on your income:  Allow no more than 2 ½ times your gross annual income for the purchase price of a house  Budget 1/3 of your net monthly income for housing costs  Divide your gross annual income by 60 and limit monthly housing costs to this amount.

3. Choosing Housing Location: ▫Housing location can impact your job and lifestyle ▫Job:  Can choose housing close to work  Can choose areas that have jobs in their fields ▫Lifestyle:  Should make sure housing is located to schools, playgrounds, shopping centers, entertainment, athletic and cultural attractions and public transportation  Make sure the needs of family members are met

4. Renting Housing Many people rent because it is convenient Allows people to get acquainted to a community before they make a long term commitment Can move when lease expires, and not worry about selling a property Do not have to worry about the value of the property increasing or decreasing Renting is economical Know how much their housing is going to cost No worries about unexpected housing costs

5. Responsibilities of Renting Lease-a contract between a tenant and a property owner  Lists the rights and responsibilities of both parties  Covers a specified rental period  Identifies the amount of rent to be paid each month  Lists what you are expected to do and what you are forbidden to do  You are responsible for fulfilling all the terms

6. Responsibilities of Renting By signing a lease you agree to: ▫Pay your rent promptly ▫Agreeing to keep the property clean and free of damage ▫Owner agrees to keep the building and grounds in good condition ▫Owner promises to obey health and safety laws

7. Responsibilities of Renting A lease protects you from: ▫Rent increase after you move into rental housing ▫Protects the owner if you want to move out after a short time You are still responsible for paying the rent until the lease expires Sublease-lease over to a second tenant ▫The person pays rent directly to the owner ▫You are still responsible to pay even if they forget or do not pay on time

8. Responsibilities of Renting Security deposit-a sum of money, usually one month’s rent, paid by the tenant before moving into the property ▫Is used to cover the damages to the property ▫Will be refunded if the terms of the lease are met ▫Owner can keep part or all Eviction-a legal procedure that forces a tenant to leave the property before rental agreement expires ▫Not following the terms of your lease can cause you to be evicted

9. Rights of Renting To rent housing that is safe and secure If an owner is not keeping the property safe, free of hazards and danger you can turn to governmental services for help

10. Buying Housing Prefer emotional security of buying a home to the convenience of renting Chosen to stay in one location for a number of years Need the space a house offers Choose to buy houses for financial reasons Houses usually increase faster than the rate of inflation Home ownership improves credit ratings

11. Buying Housing Money paid for real estate taxes and interest on a mortgage can be deducted from income taxes After you choose a home, you pay a down payment and get a loan to pay the rest Mortgage-a loan usually paid monthly over 15 to 30 years, depending on the terms Other costs to owning a home: ▫Homeowner’s insurance ▫Taxes ▫Moving expenses ▫Closing costs

12. Closing Costs Include Appraisal Property survey Deed Title search Title insurance Tax stamp Recording fees Notary fee Credit report Escrow fees

13. Buying Housing Buying a house can cost a lot, be sure to seek professional advice before you buy Be sure to know all costs before you have pay them, so you have enough money When buying a new house you may have to buy: ▫Wallpaper ▫Furniture ▫Landscaping When buying a preowned home you may have to make improvements