Chapter 6: Buying the Necessities: Housing and

Transportation

Average American Family spends ¼ of income on home

60% of housing units are owned by the people living on them

Housing Information

Town Homes: Home with individual front and back yards, but common side walls◦ Usually cheaper, but size and noise are issues

Single Family Home: House separated by neighboring homes◦ Most expensive to buy and maintain◦ Real Estate Taxes: taxes paid on land and

buildings◦ Symbolizes the American Dream

Types of Housing

Condominiums: Single unit in a complex that is individually owned◦ Monthly fees are paid for “common area” upkeep

Mobile Home: least expensive to buy and maintain◦ Suffer greater damage during storms◦ Depreciate: Decline in value

Types of Housing Cont’d

Purchase Price/Annual Income=2.0 or Less Mortgage Payment/Monthly Take-home

income=Less than 33% Loan Amount/Value of the Home=95% or less

Lender’s Buying Rules

Using rule 1: Would a person making $45,000 a year beable to afford a $100,000 single family home?

Using rule 2: Would a person taking home $1500 a month be able to afford a $600 mortgage?

Down Payment: Money Paid up front Closing Costs: Fees in buying a new home

◦ Ex. Inspections, Application fees

Other Information

Lease = long-term agreement describing the terms under which property is rented.

Clauses to avoid in leases◦ Inability to sue clause◦ Arbitrary clauses which can have you removed for

behavior not outlined in law.

Security Deposit – money a renter lets an owner hold, if the rent is not paid or an apartment is damaged, the owner may keep all or part of the deposit.

Rights and Responsibilities of a Tenant

Tenant Rights:◦ Privacy

Tenant Responsibilities:◦ Pay rent on time◦ Care for property/notification of problems◦ Follow leasing limits◦ Give notice

Landlord Responsibilities:◦ minimum services required◦ Safety laws followed

Rights and Responsibilities of a Tenant