Objective 6.00 Understand shopping options and

practices for meeting customer needs.6.03 -B

Students will be able to understand options and practices for meeting housing needs.

6.03 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?

Options for meeting housing needs1. Housing wants and needs2. Types of housing available3. Basic housing options

Housing Wants and NeedsBefore making a decision, determine

wants/needs based on the following criteria:Number of persons in familyStage of individual/family life cycleHow individuals/family prefer to spend their

timeWhat one can affordPreferred housing location---e.g., educational,

work, and shopping opportunities

Types of Housing AvailableChoice based on wants and needs

Apartments – buildings that houses more than one family in separate living units, rented by tenants

Condominium – buildings that house more than one family; person owns the unit occupied

Cooperative – a person buys shares in a corporation that owns/manages the property; owners pay for their share of maintenance and service costs, building mortgage and taxes

Single-family houses – custom-built, development, modular, or kit houses/townhouses, may rent or own

Manufactured , “mobile” homes – single-wide or double-wide moveable home

Duplex – one building that contains two separate living units

Townhouse – a dwelling of two or three stories that attaches at sidewalls to other units

Residence hall – aka dormitory -usually college/university campuses; available to attending students only

Rent or Own? Choice is YoursRenting/leasing

Paying a security deposit and monthly payment to a landlord

Rent is month to monthLeasing is a contract for a specified time

BuyingPurchasing with cash or A down payment plus monthly installment loan

mortgage payments

Pros & Cons of Renting/Leasing*ADVANTAGES DISADVANTAGESFewer long term financial

responsibilitiesLess financial riskMore free time due to

fewer maintenance responsibilities

Greater mobility

LEASE- a contractual agreement for a specified term

No equityLess authority to make

changes in the living space

No tax benefits

Before Signing Lease…Things to inspect in rental

units before signing a lease

Are exteriors neat and well-maintained

Common areas in good condition* see next slide

Safety and securityHow’s inside the unit---

size, space, appliances, furnishings, maintenance, privacy, noise, paint, layout, etc.

Cost and type of utilities and systems---heat, air, plumbing, etc.

Do your understand your lease agreement?Rights & Responsibilities of

landlordRights & Responsibilities of

tenantTerminology in leaseConditions, such as

SubleaseLate feesPets

Common AreasAny areas used by all

tenants or homeownersMaintained by landlord

or homeowner’s association for common benefit

Homeowner’s association dues usually paid monthly

Committees and boards make rules for running community

Parking areasPoolGolf courseTennis courtsPlayground

Basketball goalLaundry facilitiesClubhouseEntrance Nature, hiking trailsPonds, Gazebos,

Landscaping

Rights and Responsibilities

Implied warranty of habitability by landlord

Expects reasonable wear and tear by tenant

Right of evictionResponsible for certain

injuriesAbide by

landlord/tenant agreement

Right to quiet enjoyment

Pay rent on timeDue process before

evictionVacate premise when

lease expiresResponsible for certain

injuriesAbide by

landlord/tenant agreement

Landlord Tenant

Pros & Cons of BuyingADVANTAGES

DISADVANTAGESBuying is an investment

and increases one’s wealth (equity)

Have authority to make changes in the living space

There are tax benefits-mortgage interest is deductible, property taxes are deductible

Pride of ownership

Requires down paymentGreater costs and

financial responsibilitiesGreater financial riskLess mobilityIf buying jointly,

relationships become more complicated

Procedures in purchasing a homeFind an appropriate home to meet your needsMake an offer

Meet contingencies - any conditions that must be met in order for the deal to occur---e.g., ability to obtain financing, inspectors’ reports, completion of repairs, selling prior home

Negotiate to reach an agreement – offer and counteroffer to meet price

Make a commitment with EARNEST MONEY – small % of contract price to let seller know you want house and bind the contract until you can get your loan!

Qualify for a loanAttend the closing with seller, lender (bank representative),

real estate agents, attorney(s)

Cost of Buying a HomeDown payment

Larger amount paid, lower monthly payments, better % rateClosing costs

Attorney fees, title research, short term interest, insurance & taxes

Escrow account – Added to monthly payment to cover ongoing expenses

Insurance Property Taxes

Continuing costs Monthly installment loan payments covering principle & interest Utilities Maintenance-yard, major appliances, roof, heat A/C unit Property Taxes

Types of MortgagesConventional - fixed

rate mortgageAdjustable rate

mortgage (ARM)

Government Agencies special loansFHA loans – Federal

Housing Administration

VA loans – Veteran’s Administration through Department of Veterans Affairs Who qualifies as a

veteran?