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Chapter 12

Alternative investments. Inflation and deflation of home prices ... Selling the Home. Preparing the house for sale. Setting the asking price. Choosing a real ...

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Chapter 12

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    Slide 1:Chapter 12

    Home Purchase Decisions

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    Slide 2:Rent or Buy Decisions

    See Table 12.1 The Mallorys’ Homeownership Decision Tax consequences of rent versus mortgage payments Alternative investments Inflation and deflation of home prices

    Slide 3:Rent or Buy Decisions (continued)

    Impact of mortgage interest rates See Table 12.2 Mortgage Loan Repayment Schedule Period of ownership Generally the longer the period of ownership the greater return on the investment See Table 12.3 The Mallorys’ Rent-versus-Buy Analysis – Ten Year Ownership Period 3

    Slide 4:Rent or Buy Decisions: Some Conclusions

    Economic decision depends on assumptions made Decision might rest on non-economic decisions as well 4

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    Slide 5:How Much House Can You Afford?

    Calculate income See Table 12.4 The Mallorys’ Estimated Monthly Income Calculate payments and apply qualifying ratios Calculate expenses See Table 12.5 The Mallorys’ Monthly Payments Down payment

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    Slide 6:Choosing a Property

    Choosing an area Property taxes and quality of public services Recreational facilities Quality of school system Crime statistics Overall quality of the community Evaluating the individual home Attic Walls, ceilings and floors Roof Basement or crawl space Electrical system Mechanical systems Heating and cooling systems Water supply and waste disposal See Case Study “The House that Came off the Mountain”

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    Slide 7:Making and Closing the Deal

    Real estate agents Negotiating the price Dealing with the lender Closing attorneys and escrow agents

    Slide 8:Selling the Home

    Preparing the house for sale Setting the asking price Choosing a real estate agent The sale 8

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