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Terms in this set (58)
Condiminium
A form of home ownership in which an individual owns his or her own unit and shares ownership and expenses of maintaining common areas such as halls, stairs, lobby, and grounds.
Cooperative
A form of home ownership in which an individual buys shares in a corporation that owns the property. In return, the buyer becomes a resident in a designated unit and a member of the cooperative.
Custom-built houses
Usually designed by an architect to meet the specific needs and wishes of the person or family wanting to build.
Tract houses
Built by a developer who, in a sense, creates a neighborhood by building many houses at once within a given area.
Modular and kit houses
These houses are partially built in factories.
Town houses
Single-family units that share one or both sidewalls with other town houses.
Manufactured home
Mobile homes which are another housing alternative.
In a condominium the unit is leased by the owner to the occupant.
F
____ are single family homes, built by a developer, who creates a neighborhood by building many houses at once within a given area.
Tract homes
Security deposit
Amount of money a renter pays a landlord to insure against financial losses if the renter damages the dwelling or fails to pay rent.
lease
A legal rental agreement between the tenant (lessee) and the landlord (lessor) that outlines the terms and conditions under which the tenant occupies the property.
One advantage to renting is that renters have fixed expenses every month that cannot change.
F
A ___ may be required, which protects the landlord against financial losses in case the renter damages the dwelling or fails to pay rent
co-signer and security deposit
Security deposit
A security deposit is money provided by a tenant to a landlord to compensate for possible loss or damage to the rental property.
Maintenance
Maintenance is the work of keeping something in proper condition.
Rent
Rent is a periodic payment made from a tenant to a landlord in return for the use of rental property.
Tenant
A tenant is a person that rents and occupies a property from another person for a period of time.
Landlord
A landlord is a person who owns and rents property to others.
Total cost / number of people = $/each person
...
Advantages of renting
Mobility, few responsibilities, lower initial costs
Disadvantages to renting
Few financial benefits, restricted lifestyle, legal concerns, no opportunity home value
Advantages of buying
Tax savings, pride of ownership, potential Eco gain
Disadvantages
Financial risks, limited mobility, higher living costs
Costs with buying
Down payment, closing costs, home maintenance, property taxes
Costs with renting
First month rent, last month rent, security, pet deposit
Rent x #of months + security deposit
Down payment + closing cost
^cost upfront
Rent x months (12) x how many years- (college=4) + security deposit + rent(months)
Buy x months x years + down payment + closing costs
R + deposit = total x 2
R + deposit / 2 = total
Mortgage payment x (12 x years) = $ + close = buys
Xrent + security deposit + (12 x years) = $
(Solve for X)
Pat and his friend...share rent each month
$375
Higher living cost for homeowner
Maintenance
Mika wants to buy a condominium. He has the choice of buying it now or renting it with the option to buy at the end of 3 years. If he buys now, he could put $0 down, but he must pay closing costs of $7,100. His monthly mortgage payment will be $675.
Mika decides to rent instead of buy because it is the cheapest option over the first 3 years. His move-in costs are one months rent and a $750 security deposit.To the nearest dollar, what is the maximum amount of monthly rent payment he could pay?
828
When renting an apartment, In addition to the first month's rent, the amount to move-in often requires the last month's rent as well as a security deposit. The rent is $725 per month and the security deposit is $900. Although some of the money may be returned upon moving out of the apartment, how much money must be paid to the apartment management to be able to live in the apartment the first year?
$10,325
Sal and two of his friends rent an apartment together. Their total cost to move in included first months rent, last months rent and a security deposit of $1,200. If Sal paid a total of $1,000 to move in, how much is his share of the rent each month?
$300
Aleisha wants to buy a condominium. She has the choice of buying it now or renting it with the option to buy at the end of 4 years. If she rents now, she must pay a deposit of $1,500 and pay rent of $865 per month. If she buys, she would need closing costs and her mortgage payment would be $844. How much would her closing costs need to be in order for the cost to buy to be the same as the cost to rent?
$2,508
Viola moves frequently due to her job, but she thinks that she will stay in the area for 4 years. Therefore, she decided to buy. Choose the best evaluation of Viola's decision.
Since the costs would be the same over the 4 year period, she will have made a good decision if the property value does not decrease.
Down Payment
A down payment is the initial amount of money required at the time of a home purchase.
Credit report
A credit report is a detailed history of an individual's credit and is used by lenders to determine credit worthiness.
debt-to-income ratio
Debt-to-income ratio is the percentage of a borrower's gross income that goes toward paying debts.
Mortgage
A mortgage is the common term used for the type of loan taken out when purchasing a home.
recurring debt
Recurring debt is monthly debt obligations such as mortgage, car loan payments, credit card minimum payments, student loans, and any other loans that have monthly payments.
Qualification
Income, Savings, Monthly expenses, debt
Salary - 12(months)
^answer x .36; x .28; x .08
(answer of .28) / (answer of .08)
payment + loan = $
debt-to-income
28/36 ratio
28/36 = .8
.8x = recurring debt
X x 2= ANNUAL income
Home value x down payment = $
-compare to savings
(Income - 12).08 = $
-compare to recurring debt
Chose one with best results (not even or over)
Price = home loan + down payment
D.P = % x Price
...
Mandy has an annual salary of $37,580. Each month she has a car payment of $265 and a student loan of $120. If she applies for a home loan, how likely is it Mandy will be approved based on her debt-to-income ratio?
Not likely; recurring debt is higher than what is allowed.
Using the standard 28/36 guidelines, what is the maximum mortgage payment allowed for someone with an annual salary of $60,750?
1,417.50
Using the standard 28/36 guidelines, what is the maximum mortgage payment allowed for someone with an annual salary of $73,025?
1,703.92
Using the 28/36 ratio, determine the maximum allowable recurring debt for someone with a monthly income of $4,850.
388
Using the standard 28/36 guidelines, if the maximum monthly mortgage payment allowed for someone applying for a home loan is $1,085, what is their annual income?
46,500
A couple is required by their lender to have a down payment of 20% of the purchase price of the home they want to buy. If the couple has saved $35,000, what is the most expensive home the couple can afford to buy?
$175,000
You work for a lender that requires a 20% down payment and uses the standard debt-to-income ratio to determine a person's eligibility for a home loan. Of the following, choose the person that you would rate the highest on their eligibility for a home loan?
Person B
Which of the following would least likely have a negative impact on determining eligibility for a home loan?
taking a new job with higher pay
The loan application is for $230,000. You see that the applicant has an annual salary of $83,000 and a savings account balance of $50,000. The applicant also has a car payment of $315, a student loan of $140 and a boat loan of $96.
Somewhat likely; recurring debt is very close to what is allowed.
Bessie has an annual salary of $51,360. Each month she has a car payment of $210 and a student loan of $50. If she applies for a home loan, how likely is it Bessie will be approved based on her debt-to-income ratio?
Very likely; recurring debt is less than what is allowed.
Closing costs
Closing costs are additional expenses, above the down payment, paid at the time of the sale of a home including fees for a title search, appraisal and legal documentation.
Points
Discount points are fees paid by the borrower to a lender at the closing of a home in order to lower the mortgage interest rate.
title
A title is a legal right to the possession of property including real estate.
Appraisal
An appraisal is an estimate of value and is used to determine the value of property before the purchase of a home.
Good faith estimate
A good faith estimate is an itemized list of fees and costs associated with a loan and must be provided by the mortgage lender to the borrower within three business days of applying for a loan.
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