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. • Homeowner’s 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 buyer’s 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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This note was uploaded on 11/07/2011 for the course HACE 3100 taught by Professor Moorman during the Fall '09 term at UGA.

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

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