Renting or Buying HousingChapter 23-3

Choosing Housing•Two important factors: Income and Location• Income:

▫The housing you can afford depends on your income: Allow no more than 2 ½ times your gross annual

income for the purchase price of a house Budget 1/3 of your net monthly income for

housing costs Divide your gross annual income by 60 and limit

monthly housing costs to this amount.

Choosing Housing•Location:

▫Housing location can impact your job and lifestyle

▫Job: Can choose housing close to work Can choose areas that have jobs in their fields

▫Lifestyle: Should make sure housing is located to schools,

playgrounds, shopping centers, entertainment, athletic and cultural attractions and public transportation

Make sure the needs of family members are met

Renting Housing•Many people rent because it is convenient•Allows people to get acquainted to a

community before they make a long term commitment

•Can move when lease expires, and not worry about selling a property

•Do not have to worry about the value of the property increasing or decreasing

•Renting is economical•Know how much their housing is going to cost•No worries about unexpected housing costs

Responsibilities of Renting

•Lease-a contract between a tenant and a property owner

Lists the rights and responsibilities of both parties

Covers a specified rental period Identifies the amount of rent to be paid each

month Lists what you are expected to do and what

you are forbidden to do You are responsible for fulfilling all the terms

Responsibilities of Renting

•By signing a lease you agree to:▫Pay your rent promptly▫Agreeing to keep the property clean and

free of damage▫Owner agrees to keep the building and

grounds in good condition▫Owner promises to obey health and safety

laws

Responsibilities of Renting•A lease protects you from:

▫Rent increase after you move into rental housing

▫Protects the owner if you want to move out after a short time

•You are still responsible for paying the rent until the lease expires

•Sublease-lease over to a second tenant▫The person pays rent directly to the owner▫You are still responsible to pay even if they

forget or do not pay on time

Responsibilities of Renting• Security deposit-a sum of money, usually one

month’s rent, paid by the tenant before moving into the property▫ Is used to cover the damages to the property▫Will be refunded if the terms of the lease are met▫Owner can keep part or all

• Eviction-a legal procedure that forces a tenant to leave the property before rental agreement expires▫Not following the terms of your lease can cause

you to be evicted

Rights of Renting

•To rent housing that is safe and secure•If an owner is not keeping the property

safe, free of hazards and danger you can turn to governmental services for help

Buying Housing

•Prefer emotional security of buying a home to the convenience of renting

•Chosen to stay in one location for a number of years

•Need the space a house offers•Choose to buy houses for financial reasons•Houses usually increase faster than the

rate of inflation•Home ownership improves credit ratings

Buying Housing• Money paid for real estate taxes and interest

on a mortgage can be deducted from income taxes

• After you choose a home, you pay a down payment and get a loan to pay the rest

• Mortgage-a loan usually paid monthly over 15 to 30 years, depending on the terms

• Other costs to owning a home:▫Homeowner’s insurance▫Taxes▫Moving expenses▫Closing costs

Closing Costs Include•Appraisal•Property survey•Deed•Title search•Title insurance•Tax stamp•Recording fees•Notary fee•Credit report•Escrow fees

Buying Housing•Buying a house can cost a lot, be sure to

seek professional advice before you buy •Be sure to know all costs before you have

pay them, so you have enough money•When buying a new house you may have

to buy:▫Wallpaper▫Furniture▫Landscaping

•When buying a preowned home you may have to make improvements