Chapter 13.2-13.4 Mrs. Kapaldo. Key Concepts By the end of this lesson, you will know: – How to rent an apartment – How to buy a home – How to furnish.

Chapter 13.2-13.4Mrs. Kapaldo

Key Concepts

• By the end of this lesson, you will know:– How to rent an apartment– How to buy a home– How to furnish your home

How to Rent an Apartment

• When looking to rent an apartment, certain things need to be considered.

• The first step in finding an apartment is determining your price range.– Rent should be no more than 1/3 of your monthly

take home pay

Convenience and Neighborhood

• Convenience• If it is close to

– shops – jobs – Schools– public transportation

• it will cost more than one farther from these things

• Neighborhood• Some are safer and better

maintained than others.• Offer different amenities,

such as public parks and forest preserves

• Apartments in better neighborhoods will cost more

Environment, Size, Facilities and Pets

Size and Condition

• Rent usually reflects such pleasures such as privacy, nice view and quietness.

• Facilities• The more facilities

– Laundry machines– Pool– Cable hookups– Furniture

• The higher the price

Environment

• The larger and more maintained the apartment, the more expensive. Pets

• Those that allow pets usually charge extra.• Ex. Snake can cost

$25/month

Where to Find Leads

• Family and Friends– Can suggest places that worked for them

• Newspaper Ads– The ad describes basic features and prices, usually

using abbreviations to keep them short because they cost so much to run

• Internet– Most search engines have real estate listed, as

well as many other web sites

Where to Find Leads

• Real Estate Agencies– List apartments as well as houses. Visit or contact

one for available listings.• Apartment Managers

– Are responsible for showing the apartments to potential renters and solving maintenance problems

– You can find their phone number in a phone book

How to Evaluate an Apartment

• Once you’ve narrowed down your search, call the apartment manager and make an appointment to look at it.

• Tour the actual apartment, not a model• If the tenant (current renter) still lives there, set a time

that you can enter the apartment.• Once in, walk through every room, and take notes on

the checklist– Include pos. and neg. comments

Typical Questions to Ask

• What is the monthly rent?• Does the rent include heat, electricity, gas and water?• How long is the term of the lease?• At the end of the lease, must I sign a new lease, or can

I rent month-to-month?• What facilities are available?• What rules or restrictions do you have?• Can I have pets? If so, is there an extra charge?• What type of security is provided?

The Lease and Moving In

• Lease Terms: Rights and Responsibilities– The lease details your rights and responsibilities as

a tenant and those of your landlord (the owner)– Always read the lease carefully before signing.– If you see something you don’t like, ask for it to be

changed, and get them in writing, signed by the apartment manager or landlord.

Lease TermsWhat could be in your lease

• Length of time the lease runs• Rent Amount and due date• Amount of your security deposit

– Money landlord holds to cover any damages to rental property

• Who is responsible for paying utilities such as heat

• Rights to use the facilities

Lease Terms

• Restrictions (ex. Pets)• Rules of conduct (Ex. Concerning loud music

and parties)• Landlord’s responsibility to make repairs• Conditions under which the landlord can enter

your apartment (ex. Permission unless an emergency)

• Notice you are required to give before you move out.

Condition Report

• You are responsible for keeping the apartment in good condition.

• If you damage it, the landlord can keep your security deposit to pay for repairs.

• To make sure you get your money back, walk through the apartment with the landlord and make a list of existing damages before you move in.

Moving Expenses: How are you

• If you have the money, hire a reliable company that friends or family have recommended.

• If you don’t have the money, rent or borrow a truck and move yourself.– Have friends and family help you!

Packing• You can save money with a company if you pack the

boxes yourself.• You can get free boxes from stores.• Start packing early.• If you don’t need it, don’t move it! Donate it!• Pack similar objects together, and label them!• Put items you need immediately into one box.

– Ex. Toothbrush, set of clothes, sheets.• Make sure the boxes aren’t too heavy to pick up

yourself.

Mail & Utilities

Mail• Go to the post office a few

days before and change your address.

• Notify companies like your employer, creditors, doctor and insurance company yourself, so they are aware of the change of address.

Utilities• Call the gas, electric, phone

and water companies to set up your accounts.

• There may be a security deposit or service fee.

How To Buy a House

• Average cost of a house in the U.S. is over $100,000

• You will most likely need a loan to buy a house.

Costs of Ownership

• Mortgage is a loan to buy real estate, such as land or a house.

• The property serves as collateral for the loan.– If you don’t repay your loan, the property will then

belong to the money lender.• The mortgage is just one of the costs of

owning a home.– You will have to pay points and closing costs when

buying the house, in addition to taxes and insurance.

Mortgage PaymentMortgage has two parts:

Principal• The amount you borrow• In order to get a mortgage,

you need to have a down payment– Percentage of the price up

front.– Usually around 20 %– $100,000 x 0.20=$20,000– Leaving the principal to be

$80,000

Interest• The percentage of the

principal remaining after each payment.

• You may be paying the mortgage for 20 or 30 years, the interest can add up to be a lot of money!– 9% on $100,000 for 30 years=

$151,732

Points, Closing Costs & Homeowner’s Insurance

Points• Are a mortgage lender’s

service charge, each point being equal to 1% of the principal

• Points are essentially additional interest.

Closing Costs• Are a collection of fees to

cover tasks the lender must do related to your loan.– Ex. Property inspection

Homeowner’s Insurance

• Helps protect you against loss from fire, theft, or other hazards.

Property Taxes & Mortgage Insurance

Property Taxes• The local government

charges taxes based on the value of your property.

• The lender may require you to pay a portion of the taxes and homeowner’s insurance along with the mortgage.– Held in an escrow account

until tax payments and insurance are due.

Mortgage Insurance• If you have a government

insurance loan, the mortgage payment will also include a percent or two to pay for the required mortgage insurance.

• Gives you the chance to get a loan with a smaller down payment.

Types of Mortgages

Fixed-Rate Mortgage

• Charge the same interest rate the entire term of the loan

• Usually last 15 to 30 years.– Ex. If your first mortgage payment is $536, then

the last payment will be $536.

Adjustable-Rate Mortgage (ARMs)

• Where interest rates on some loans go up or down as rates in the economy rise and fall.

• By accepting the changing rates, the person will start with a lower beginning rate than with a fixed rate.

• Can make borrowing less expensive.• Can make budgeting more difficult.

Insured Mortgages

• FHA mortgage: a loan insured by the Federal Housing Administration, designed to reduce the down payment (for first time home buyers only)

• Can get through the bank, savings and loan, or other financial institutions.

VA Mortgage• Is insured by the

Veteran’s Administration to help past and present military people buy a home.

Graduated-payment mortgage

• Allows you to make small payments for a few years and much larger ones later.

The Home Buying Process

• A house often appreciates – Grows in value over time.

• Equity is the difference between what a home is worth and what the buyer still owes on the mortgage.

• You can use the equity on the house as collateral to borrow money for other purposes, known as a Home equity Loan.

Real Estate Agents

• Are experts at getting how buyers and sellers together.

• Home sellers usually list their property with a real estate agent.

• When you work with an agent, they have access to a database of houses.

Evaluating Houses

• Make a checklist of features most important to you:– Room by room

• Water marks• Cracks• odors

– Neighborhood• Schools• stores

Making an Offer

• Offer is a proposal to buy a house for a stated price.– Start with several thousand dollars less than the

asking price, in order to negotiate.• After the price is agreed, a deposit of $1000 to

$5000 is expected– The deposit, or earnest money, is proof of your

intention to buy at the agreed upon price. If you change your mind, you give up this money.

Completing the Deal

• You must find a mortgage. Once you have a mortgage, you apply for a loan and wait.

• After the loan is approved, you can sign the final paperwork.

• After the papers are signed, you will receive the keys and title to your new property.

FURNISHING A HOUSE

• Plan your place– Consider what will fit into your space– Look around at other people’s space and see what

is essential– Make a wish list and prioritize it

• Things you want immediately• Things you want soon• Things you would like to have eventually

What can you borrow

• Borrow things before you buy them:– Old linens– Dishes– Utensils

Buy used

• Stores like Salvation Army and Goodwill carry inexpensive used goods.– Furniture– Dishes– Appliances

• Be practical

Buy New Affordably

• To make rational buying decisions, determine how much quality is worth the price.– Ex. 250 thread count sheets vs. 180 thread count

sheets: you can’t tell the differences of softness.• Shop at discount or outlet stores.

Furniture• Consider the functionality

– Will it be used?– Is it comfortable?– Will it withstand lots of use?

• Consider the material?– Particleboard is cheap and doesn’t last

Furniture

• Consider Construction– Does the furniture sit level on the floor?– Do the joints feel tight?– Are major joints reinforced?– Do drawers and doors move easily?– Are wood sufaces finished smoothly?– Does the fabric feel thick and strong?

Consumer reports

• Is a magazine that tests products and publishes the results in the magazine.

• The reports evaluate different brands and provide extensive info about features and options.

Other info

• Energy labels– Predict the cost of running an appliance.

• Options– The more options you get, the higher the price

• Warranties– Great to have, but seldom worth paying extra for

an extended warranty• Bargains

– Look for big sales, or considering buying floor models

The end!