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The Financial Side of Housing

The Financial Side of Housing. Purpose. For Family For College First Job out of College Summer Getaway Rent or Buy?. Renting. Typically done with a lease Lease can be month-to-month, 6 months, 1-year, or 2-year Typically requires upfront fees 1. Rent for first month

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The Financial Side of Housing

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  1. The Financial Side of Housing

  2. Purpose • For Family • For College • First Job out of College • Summer Getaway • Rent or Buy?

  3. Renting • Typically done with a lease • Lease can be month-to-month, 6 months, 1-year, or 2-year • Typically requires upfront fees 1. Rent for first month 2. Rent for last month 3. Security Deposit 4. Utilities Deposit 5. Cleaning Deposit

  4. Other Costs • Rental Truck • Packing Supplies • Furniture • Cleaning Supplies • Hiring Movers? • Cost of setting up the apartment

  5. Pricing • You should never spent more than 40% of your income on rent (or on a mortgage) • Budget accordingly • Keep I mind your fixed and variable expenses • Continue to save 10% of income each month

  6. Mortgage • Can Be a fixed rate • Fixed Mortgage • Variable Mortgag • Balloon payment

  7. fixed-rate, fixed-payment mortgages: • Conventional 30-year mortgage • Conventional 15- or 20-year mortgage • FHA/VA fixed-rate mortgage • “Balloon” loan (3-10 year terms)

  8. Adjustable rate, variable payments • Adjustable-rate mortgage (ARM) • Graduated-payment mortgage • Growing-equity mortgage

  9. Credit Again your mortgage acceptance will be based on your credit record. The amount of the mortgage for which you qualify will be influenced by: • Your income • The amount available for a down payment • Current mortgage rates

  10. Before applying for mortgage • Determine the estimated value of the home you would like to purchase. • Obtain funds for a down payment from savings or through gifts or loans from family members. • Reduce other debts or improve your credit record, if necessary. • Compare fees, services, and mortgage rates for different lenders. • Prepare the mortgage application.

  11. Fees the buyer incurs at closing • Title search fee ($50-$150) • Title insurance ($100-$600) • Attorney fees ($50-$700) • Appraisal fee ($100-$300) • Recording fees and transfer taxes ($15-$30) • Credit report ($25-$75) • Termite inspection ($50-$150) • Lender’s origination fee (1-3% of loan amount) • Reserves for home insurance and property taxes (amount varies) • Interest paid in advance (if applicable)

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