11-1,3 - Tuesday November 2 nd Chapter 12: Being a Better...

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Unformatted text preview: Tuesday November 2 nd Chapter 12: Being a Better Consumer of Housing and Vehicles Expenditures Housing and transportation are the two largest expenditures for most consumers Housing: $____________ (2010) Transportation: $_______ annually (2010) Bureau of Labor Statistics: Spending on food and housing fell 3.8% and 2% respectively contributing to the overall drop in spending in 2010. Healthcare (+1%) and transportation (+.2%) were the only major components of spending to increase. Discrimination: The Fair Housing Act prohibits discrimination on the basis of Race or color Religion Sex National origin Familial status Disability Homeownership The national homeownership rate is ________% One of the major ways homeownership available: New Mortgage Products and credit guidelines opened the market to populations that previously would not have qualified to buy a loan. Costs of Ownership Monthly mortgage payments Down payment (one time cost) Closing costs (one time cost) Utilities: electricity, water, garbage, etc. Homeowners insurance Real estate property taxes Maintenance Advantages of Ownership Build equity which can be borrowed against if necessary Pride of ownership Feel more comfortable and have more privacy Stable mortgage payments More room and storage Improvement of buyers credit rating Income tax deductibles for property taxes and mortgage interest Potential for property to increase in value Free to make home improvements and have pets (sometimes not allowed in rentals) Disadvantages of Ownership Large down payment Move in costs Insurance costs Possible for property to decrease in value Time, money, and energy commitment Repair and maintenance costs Property taxes can raise Money is tied up in the home May take several months to sell a home if trying to relocate What can you afford to buy? ________ times your annual household gross income 28/36 qualifying rule for conventional mortgages House payment should be no more than ___________ of your monthly household gross income. o 30%> means you are house poor (unaffordable burden) o Half of the working poor spend at least 50% of their income on rent, a critical burden House + debt payments should be no more than ____________ of your monthly household income Home as Investments Athens median home price o $130,000 (2000) o $193,000 (2006) o $175,000 (2007) o $169,000 (2009) o $114,109 (foreclosure price) Buying a House Down payment o 3% to 20% of the selling price of the home...
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11-1,3 - Tuesday November 2 nd Chapter 12: Being a Better...

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