Chapter 7 - Selecting and financing housing. In this chapter, you will learn to: Assess costs and benefits of renting, implement the home-buying process, determine costs associated with purchasing a home, develop a strategy for selling a home. | 7 Selecting and Financing Housing Evaluating Renting and Buying Alternatives Your lifestyle and your choice of housing How you spend your time and money Every buying decision = lifestyle statement Personal preferences vs. financial factors Traditional financial guidelines: Spend no more than 25-30% of take-home pay on housing, or No more than 2 1/2 times your annual income More difficult to do in inexpensive urban areas 7- Choice should be based on: Lifestyle (do you like or want to do maintenance tasks?) Financial factors (., affordability, tax deductions, equity) Mobility vs. permanence (are you able to “settle down”?) Renting = less costly in short run (monthly payment) Home ownership =long-term financial advantages (tax deductions and equity growth over time) Objective1 Assess Costs and Benefits of Renting 7- Renting vs. Buying Housing 7- Or Insert Exhibit 7-1 Selecting a rental unit Apartment or house Advantages of renting Easier to move Fewer maintenance responsibilities Minimal financial commitments Disadvantages of renting No tax benefits “Money down the drain” (not building equity) Limitations regarding remodeling Restrictions regarding pets and other activities Rental Activities 7- Description and address of property Name and address of the owner/landlord (lessor) Name of tenant (lessee) Effective date and length of the lease Amount of security deposit Amount and due date of rent Date and amount for late rent payments List of included utilities, appliances, etc. Restrictions on certain activities (., pets, remodeling) The right to sublet the unit; transfer clause Conditions under which landlord may enter unit Legal Details of a Lease 7- Objective 2 Implement the Home-Buying Process 7- Evaluate Home Ownership Stability of Residence American dream/norm (personalized living location) Financial Benefits Deduct property taxes, mortgage interest Potential increase in value of your home Building equity in your home Lifestyle . | 7 Selecting and Financing Housing Evaluating Renting and Buying Alternatives Your lifestyle and your choice of housing How you spend your time and money Every buying decision = lifestyle statement Personal preferences vs. financial factors Traditional financial guidelines: Spend no more than 25-30% of take-home pay on housing, or No more than 2 1/2 times your annual income More difficult to do in inexpensive urban areas 7- Choice should be based on: Lifestyle (do you like or want to do maintenance tasks?) Financial factors (., affordability, tax deductions, equity) Mobility vs. permanence (are you able to “settle down”?) Renting = less costly in short run (monthly payment) Home ownership =long-term financial advantages (tax deductions and equity growth over time) Objective1 Assess Costs and Benefits of Renting 7- Renting vs. Buying Housing 7- Or Insert Exhibit 7-1 Selecting a rental unit Apartment or house Advantages of renting Easier to move Fewer maintenance .
