COA 4131 1st Edition Exam 2 Study Guide Lectures 9 21 Lecture 9 1 What percent of Americans own their own home About 67 of Americans own their own homes 2 About 70 of the economy is driven by what Consumers drive 70 of the economy 3 Explain a security deposit A security deposit is typically one month s rent that is given up front It can be given back to the renter at the end of the lease if the place is in good condition 4 What is included in a lease A lease is a contract that includes the rights and obligations on both sides of the renter and seller 5 Where does the biggest chunk of your budget come from The second largest Housing is the biggest chunk of typical budget at around 32 of expenses Transportation is the second biggest chunk 6 Explain the pro s and con s of renting The pro s include a pool and other services that are included having a landlord to take care of all of your problems mobility and community Mobility is a pro because leases can range in amount of time such as month to month 9 month or year long so you have the choice to move around Also renters are attracted to the idea of a community where everyone is close and it makes them feel safer There also some negative sides of renting such as with renting you are not able to build worth because you are simply paying off rent If the property goes up in value you do not benefit and if it the prices go up there is nothing you can do about it Also most paces do not have a garage so there is a lack of storage space and a laundry hookup may or may not be available in the actual unit 7 Describe the pro s and con s of buying and owning a house The positives of owning a home include building equity and worth laying down roots in the community building credit having a fixed mortgage that will stay at the same rate for years and having pride in ownership The negative side of owning is having a Home Owner s Association that can control the rules and regulations of the community and the fee s that come with the HOA which can be very expensive Another con is if something breaks you have to fix it which can also be expensive Also a down payment of 20 is a con especially since this down payment has increased and used to be 10 8 What is the rule of thumb when deciding if you should rent versus buy If you will be residing there for about 3 years or less renting is a better choice 9 Where are the most expensive places to reside in the U S The most expensive places are in the North East U S 10 Where are the least expensive places to live in the U S The Midwest is the where the cheapest home prices are Lecture 10 1 What are the two criteria to check in the first step to buying a home In the first step it is vital to determine your financial readiness and check your PITI A bank will do these for you PITI stands for principle interest taxes insurance 2 What part of buying a home is of great risk Real estate involves more of a great risk but may be a greater return over time 3 How much is a normal down payment for a home When building a down payment the normal amount is about 10 4 Explain the role of the real estate agent The real estate agent is there to help you sell or buy a home They usually have a rate of 6 but this can be negotiated According to the contract you will have to sign you have to be exclusive to the agent for about 3 to 6 months 5 How do people usually start selling their home It is normal for people to start trying to sell their home on their own first but then turn to a realtor when it does not sell 6 What is a binder A binder is a check that the realtor will give from the potential buyer to the seller to hold onto as a placeholder until it is cleared from the bank to secure the spot and buy the house If it is accepted the check can either be given back to the buyer or can be used and the amount of the check can be subtracted from the price of the house If the bank does not clear the check or you decide to not buy the house the seller is not allowed to keep that check Thus it is important to only use a binder if you are absolutely sure you want to buy that house and maybe there are other potential buyers around for the same house 7 What is the most common type of loan Most people get a fixed rate conventional loan that is fixed at 6 for 30 years 8 Explain the closing process During the closing the buyer and the seller exchange keys This is a huge commitment and is usually a physical meeting that occurs for about one to two hours Lecture 11 1 What percentage of homeowner sell their houses on their own without a realtor About 10 of homeowners sell their houses themselves 2 What percentage of first time buyers make up the housing market About 40 of first time buyers make up the market 3 Explain the pro s and con s of leasing car Leasing allows the person to own a brand new car for 3 years and make monthly payments on it The pro s are that it is convenient it allows you to have a car that you might not be able to afford to buy and you do not have to get involved with the buying and selling process The disadvantages are that you do not own it so you don t have pride in ownership it is an extra cost the miles they allow are usual too low for the typical driver there is a premium charge for going over the miles and repairs are not good on a lease 4 Give an example of a fixed cost with a car Monthly payments would be a fixed rate because it would be the same amount each month 5 Give an example of a variable cost with a car Gas is a variable cost because gas prices fluctuate and the amount of gas needed to fill up your car changes Also an SUV will use a lot more gas than a hybrid car Lecture 12 1 What is the average amount of time insurance covers for childbirth in a hospital Typically the coverage is only for 24 hours after the baby is born 2 What is more expensive a vaginal delivery or a C section A C section is more expensive by about 5 000 6 000 3 How much of does it typically cost for …
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