CSM 204 Chapter 9 LectureOutline of Previous LectureI. Financial Implications of Consumer DecisionsII. Practical Purchasing StrategiesIII. Common Consumer MythsIV. Making Major PurchasesV. Resolving Consumer ComplaintsVI. Personal Consumer ProtectionVII. Quiz 2-3Outline of Current LectureI. Opportunity Costs of Housing CostsII. Apartment RentingIII. House RentingIV. Owning a New HomeV. Owning a Previously Owned HomeVI. Owning a CondominiumVII. Owning a CooperativeVIII. Owning a Manufactured HomeIX. Renting your ResidenceX. Home OwnershipXI. The Home Buying ProcessXII. Determining NeedsXIII. Finding and Evaluating a PropertyXIV. Pricing and FinancingXV. Fixed Rate MortgagesXVI. Other Financing MethodsXVII. Closing the DealXVIII. Selling your HomeCurrent LectureChapter 9- The Housing Decision: Factors and FinancesOpportunity Costs of Housing CostsInterest income lostThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.Time and cost of commuting to live in less expensive areasExample: Although you live in a less expensive area outside of the city, it is likely that you still work in the cityNo tax advantages for rentersN0 equity built up for rentersTime and money to repair/improve lower priced homeTime and effort to custom buildApartment RentingAdvantagesEasy to moveLess maintenanceMinimal financial commitmentDisadvantagesNo tax benefitsRemodeling limitationsRestrictive covenantsHouse RentingAdvantagesEasy to moveLess maintenanceMinimal financial commitmentMore space than apartmentDisadvantagesNo tax benefitsRemodeling limitationsRestrictive covenantsHigher utilities than apartmentOwning a New HomeAdvantagesNo previous ownerPride of ownershipTax benefitsDisadvantagesFinancial commitmentHigher expenses than rentingLimited mobilityOwning a Previously Owned HomeAdvantagesEstablished neighborhoodPride of ownershipTax benefitsDisadvantagesFinancial commitmentHigher expenses than rentingLimited mobilityPossibility of repairsOwning a CondominiumAdvantagesPride of ownershipTax benefitsLess maintenance than a houseAccessibility to recreation and business districtDisadvantagesFinancial commitmentLess privacyLimited mobilityUncertain demandRulesAssessmentsOwning a CooperativeAdvantagesOwnership is non-profitStable property valuesDisadvantagesFinancial commitmentDifficult to sellMay be difficult to financeQuality may be poorRenting your ResidenceThe searchSelect an area and rental cost for your needsCompare costs and facilities between unitsTalk to current and past residentsAdvantages of rentingEasier to moveFewer maintenance and repair responsibilitiesLower initial costsHome OwnershipAdvantagesPride of OwnershipFinancial benefitsLifestyle flexibilityDisadvantagesFinancial uncertaintyLimited mobilityHigher living costsThe Home Buying ProcessDetermining NeedsEvaluate owing your own placeAssess types of housing availableDetermine how much you can affordPrequalify for a mortgage loanFinding and Evaluating a PropertySelecting a LocationBe aware of zoning lawsAssess the school systemUsing a real estate agentConduct a home inspection or hire an inspectorMortgage Company will want an appraisalPricing and FinancingDetermine the priceNegotiate the priceDetermine down payment amountInvestigate ratesApply and qualify for a mortgageFixed Rate MortgagesConventional15-year amortization30-year amortizationGovernment ProgramsVeterans Administration (VA)Federal Housing Authority (FHA)BalloonOther Financing MethodsAdjustable Rate MortgagesBuy DownsSecond MortgagesReverse MortgagesRefinancesClosing the DealApplication or origination feeCredit reportTitle insurance and search feeAttorney’s and appraiser’s feesProperty surveyPest inspectionHomeowner’s insuranceEscrow for taxes and insurancePrepaid interestReal estate commissionSelling Your HomePreparing your homeDetermining the priceSelling yourselfUsing a realtorOwner