Best Home Choices: Location, Cost, and Lifestyle

2. 18 Housing

3. Chapter Objectives • List key factors to consider when choosing a housing location. • Evaluate different types of housing. • Describe and compare the responsibilities and costs involved in renting versus buying a home. • Compare and shop for home financing. continued

4. Chapter Objectives • Decorate and choose furnishings to fit your tastes, lifestyle, and budget. • Evaluate furniture and floor coverings in terms of quality, design, and price. • Describe key home care and maintenance responsibilities.

5. Central Ideas of the Chapter • Finding a place to call home involves assessing your needs, wants, and budget. • For home buyers, a home can be an investment. It is only a good investment if home owners fulfill their financial obligations, such as making regular mortgage payments. • Housing costs also include the costs of moving, utilities, furnishing a home, and maintaining and repairing it.

6. Housing Location • You will spend much of your income on a place to live, so you need to consider choices carefully • Location is one of your most important considerations continued

7. Housing Location • Factors include • employment opportunities • cost of living • climate • lifestyle • neighborhood • community facilities • schools

8. Sources of Information • Chambers of commerce • Local newspapers and magazines • Classified ad pages and local government listings in phone books • Long-time and new residents • Travel books and almanacs continued

9. Sources of Information • Community groups • Real estate brokers • The Internet

10. Types of Housing • Apartments, condominiums, and cooperatives • Most are buildings with more than one living unit • Each unit has private living quarters • Residents share common areas: lobby, grounds, laundry facilities

11. Apartments, Condominiums, and Cooperatives • Apartments are rented; tenants lease apartments from owners • They vary in services and facilities offered: • laundry equipment • parking spaces • recreational facilities continued

12. Apartments, Condominiums, and Cooperatives • Most people living in condominiums own the unit they occupy • Owners jointly own the surrounding building and grounds; they pay monthly fees for its operation and maintenance • Owners usually elect a board of managers to make policy and management decisions continued

13. Apartments, Condominiums, and Cooperatives • Condo owners • obtain mortgages to buy a unit • refinance or sell their own units • pay property taxes • have tax and equity benefits continued

14. Apartments, Condominiums, and Cooperatives • Buying a cooperative is buying shares in a corporation that owns a property • Owners pay monthly fees for service and maintenance, building mortgage and taxes • Owners may need board approval before selling or remodeling a unit

15. Single-Family Houses • Most people buy or rent an existing house • Looking at different types of houses can help you decide what you like best • If you buy, • look for solid construction inside and out • consult experts, especially an independent contractor to inspect the house continued

16. Single-Family Houses • Newly constructed houses can be • custom-built houses designed to a buyers’ specifications; can be costly • tract houses built from similar plans to lower costs • modular and kit houses partially built in factories; relatively less expensive • town houses that share one or both sidewalls

17. Manufactured Homes • A single-family house built in a factory and shipped to and erected on a home site • Home sites are often manufactured home communities owned by businesses that charge monthly rents • Generally cost much less and have low maintenance costs; but may decrease in value over time

18. Monthly Housing Costs • Housing costs include • maintenance • rent or mortgage • utilities • property taxes (home owners) • insurance continued

19. Monthly Housing Costs • Each month, housing costs should be less than one-third of take-home pay • Monthly housing costs should be less than your total monthly income and earnings minus all non-housing expenses continued

20. Monthly Housing Costs • If you plan to buy a home, you’ll need money for a down payment and closing costs in addition to a monthly mortgage • Consider costs of moving and buying furnishings

21. Renting Versus Buying • Renters’ financial responsibilities include • rent • utilities • maintenance of the rental unit continued

22. Advantages of renting Fewer financial responsibilities More free time Less financial risk Greater mobility Disadvantages of renting No buildup of equity Little control No tax benefits Renting Versus Buying continued

23. Renting Versus Buying • Advantages of buying: • Can increase wealth • Tax benefits • Greater control and freedom • Sense of permanence, source of pride and satisfaction continued

24. Renting Versus Buying • Disadvantage of buying: • Greater costs and financial responsibilities • Less mobility • Complicated relationships when friends or roommates buy a home together • Greater financial risk

25. Renting a Place to Live • To find a place for rent, • tour areas with “For rent” signs • talk to apartment building managers • read classified ads • consult real estate agencies • ask college housing office • check community bulletin boards • talk to friends, acquaintances continued

26. Renting a Place to Live • If possible, ask current tenants if • heating and air conditioning is adequate • other tenants are agreeable • the noise level is acceptable • privacy and security are adequate • maintenance and repairs are done promptly

27. Rental Applications • Information you provide includes • name, address, phone • employer’s contact information • financial information • names and contact information of references • list of previous addresses and previous landlords continued

28. Rental Applications • You may need to • give your Social Security number • pay a fee • give permission for your credit report or credit score to be checked continued

29. Rental Applications • If your application is accepted, you will • sign a lease • pay the first month’s rent • pay a security deposit, which should be returned with interest minus any charges for damage to the property

30. Rental Leases • A lease explains the legal rights and responsibilities of both tenant and landlord • Read a lease carefully before signing • Spaces should be filled in accurately • Verbal agreements should be added • You may want a lawyer’s advice • Get a copy and keep it in a safe place continued

31. In Your Opinion • If you were a landlord, how would you judge whether a person would be a good tenant? Are your criteria fair and legal?

32. Rental Leases • Content includes • rent and penalties for late payments • security deposit amount • conditions under which deposit is returned • utilities included in rent • furnishings, appliances, and services included in rent • what is not included in rent continued

33. Rental Leases • Content also includes • lease period • upkeep, maintenance, repairs • legal remedies • other conditions of use

34. Renter Protections • A variety of federal, state, and local laws and regulations protect renters continued

35. Renter Protections • Laws prohibit discrimination • Landlords must give notice before entering a renter’s dwelling • The stated rent can’t be raised during the lease period • If heat is included, it must be provided when temperatures are low • Fire alarms must be installed continued

36. Renter Protections • Handling condition reports: • When you first gain access, conduct an inspection of the unit or house • Note any damage or problems on the condition report or lease • Keep a copy of the report for yourself • Consider buying renter’s insurance

37. Being a Good Tenant • Pay rent on time • Meet the terms of the lease • Keep dwelling clean and pest-free • Prevent damage to property • Report problems right away • Avoid disruptive noise and behavior • Give notice and clean up before moving

38. Young Adults and Rental Housing • Many young adults look forward to moving into their own places • This goal requires planning and saving

39. Living with Roommates • Living with roommates can make living expenses more affordable • Before moving in together, prospective roommates should discuss • each person’s share of rent and when rent is due • how security deposit will be paid; how damages will be paid continued

40. Living with Roommates • how long each person expects to stay • who will pay rent if someone leaves before the lease term is up • how utility and other bills will be divided • what personal items will be shared • whether food and cooking will be shared • whether guests will be allowed • how housework will be divided

41. Buying a Home • Know how much you can spend • List the features you need • Decide which desired features are most important

42. Real Estate Brokers • Home buyers and sellers usually turn to real estate brokers for help • A broker helps a home seller • price the home • advertise and show it • negotiate a sale with a prospective buyer continued

43. Real Estate Brokers • Good brokers or agents • know their territory • have multiple contacts • know home prices in the area • have information about property taxes, zoning laws, school quality • They receive a commission, usually paid by the seller

44. Exclusive Buyer Agents • Home buyers can use exclusive buyer agents who work for the buyer and not the seller continued

45. Exclusive Buyer Agents • Exclusive buyer agents • help buyers find neighborhoods that meet their search criteria • set up appointments to tour homes • can help find financing • negotiate the sale

46. Your Offer • The seller’s asking price is often not the final price paid by the buyer • Home prices are usually negotiated between buyers and sellers • A buyer’s offer should be based on the final sale prices of comparable homes in the area continued

47. Your Offer • One reason buyers offer less than the asking price is when the property needs repair continued

48. Your Offer • Other reasons buyers offer less: • A home was on the market a long time • Comparable homes nearby sold for less • Seller is desperate to sell • Buyer is flexible about move-in date • There are many homes on the market

49. Purchase Agreements • A purchase agreement includes • description of the real estate • its location • purchase price • possession date • all conditions and terms of sale continued

50. Purchase Agreements • Buyers give sellers an earnest moneycheck; buyers can lose the money if they don’t go through with the agreement • Contingency clauses require certain conditions to be met before the contract is binding