The Finances of HousingChapter 9

Chapters 9.1-9.2

Opportunity Costs of Housing Choices

‘Trade-Offs’ Interest

› Lost with a down payment/security deposit Commuting

› Driving to work daily› Time vs Cost

Time & Money› Lower/older priced homes

BRAINSTORM

Respond in your notes Textbook page 274 Figure 1 Question

Renting vs Buying

Housing Source Information› Libraries› Newspapers› Real Estate Agents› Government Agencies

BRAINSTORM

What decisions about housing will be determined by your personal lifestyle?

As of right now, what is important for you to have in your first place?

Record answers in your notes

Renting an ApartmentAdvantages

Mobility Low maintenance Low financial comitment

Renting an ApartmentDisadvantages

No tax advantages Less pricy

Figure 4: A Typical Lease Agreement

Textbook pg 281 Respond in your notes:

› Which parts of a lease are most likely to be negotiable?

Figure 5: Finding and Living in Rental Housing

Textbook pg 282 Respond in your notes:

› How does the lease protect the tenant and the landlord?

Homework

Complete the following end of the section assessments:› Page 276 # 1-4, 6› Page 283 # 1-4, 6

Chapter 9.3

Owning a HomeAdvantages

Pride of ownership Plenty of space Tax benefits

Owning a Home Disadvantages

Financial commitment High living expense Limited mobility

BRAINSTORM

How would you begin an apartment search?

Which features would be most important to you?› Location› Size/Cost› Building Amenities› Layout

Features

Size vs Cost

Tenant› Pays for the right to live in your rental› Owned by someone else

Landlord› Owns the property that is being rented

Complex

Location

What are some areas/places people want to live near?

Finances

What are some costs to consider when selecting a rental unit?

Building

What are some factors about the building/complex that are important to consider?

Layout & Facilities

How does the layout of the apartment/complex and the facilities it offers play a role in renting a unit?

What do you believe people are looking for?

DECODING THE MESSAGE

Read the listing for an apartment that is in your notes. Can you decipher what they are advertising for rent?

Advantages of Renting

Greater mobility Few Responsibilities Lower Initial Cost

Disadvantages of Renting

Financial and Lifestyle Restrictions Legal Issues

BRAINSTORM

How does the lease protect the tenant and the landlord?

Record thoughts in your notes

The Cost of Renting

Factors that determine cost:› Location› Living Space› Utilities› Security Deposits› Renters Insurance

Guided Practice

Renting vs Buying Worksheet Examining

› Lease Agreement› Rental Agreement› What's the difference?

Be prepared to discuss your thoughts

Buying a Home: Affordability and Your Needs

Price and Down Payment Size and Quality ‘Trading Up’ Location

5 Steps in Buying a Home

Determine your ownership needs Find and evaluate a property Price the property Obtain financing Close

› Insurance› Home inspection› Appraisal› Credit report› Land transfer tax› Interest paid in advance?

Document Detectives

Mortgage amount is determined by:› Income, amount available for down

payment, current market rates

Calculating the costs of mortgages Page 289 Record answers – discuss

Real Estate Agent

Great source of homes = location, availability, negotiators › Sellers› Buyers

Determining the Life of the Home

Topics to consider when making an offer:› Length on the market› Competition› “Seller’s Market” vs “Buyer’s Market”› Current owners› Meeting your needs› Financing› Taxes and Insurance

Around the World

Italy Page 293 Record answers - discuss

Types of Mortgages

Fixed-Rate Mortgages Adjustable-Rate Mortgages Government Financing Program

› FHA Home Equity Loans Refinancing

Computing Mortgage Payments Worksheet