Notes

Unit 5 Lesson 1
Appreciation - To increase in value.
•Equity - The money value of the difference between what a home is worth and what the buyer still owes on the mortgage of a property.
•Landlord - The owner or a representative of the company that owns the property that is rented or leased to another.
•Lease - A legal contract between owners and tenants of properties. The lease describes the rents to be paid, condition of the property, and other responsibilities of each party.
•Mortgage - A loan to buy real estate, such as land or a house. If you fail to repay your mortgage (default) the lender can take your home to repay the loan.
•Mortgage Payment - The amount you pay monthly towards owning your home. It is made up of four components - PITI (Principal, Interest, Taxes, Insurance):
•Principal - Amount you borrow divided over the length of the loan.
•Interest - Percentage of the principal, cost of borrowing money.
•Taxes - Property taxes for the year, divided into a monthly cost.
•Insurance - homeowner's insurance to protect property against catastrophic loss.
•Tenant - A person who rents or leases property (apartment, house, etc.) from a landlord.

Apartment
A good rule-of-thumb suggests no more than 30% of your monthly gross income go toward rent. Even better, keep your rent at 25% and invest the other 5%! Remember, the more you spend on rent, the less you have for everything else like food and entertainment.

Location

Quality of neighborhood, close to shopping, schools, expressways; the area around your apartment including the view, landscaping, extra space for more privacy, and close to pool.

Size and Condition

The bigger the apartment the more it costs; the newer the building, the more it costs; the better an apartment is maintained, the more it costs.

Facilities/Amenities

Laundry hookup, cable, parking spaces or spaces available for guests, swimming pool, tennis court, basketball court all add to the price.

Where to Look
•Anyone you know can be a valuable resource. They may know of an open apartment in their community, or know someone who is moving.
•Real estate agents list apartments and can be helpful if you are not familiar with the area.
•Classified ads in the real estate section list basic features and price as well as location.
•Internet classified ads also describe apartments for rent and often provide a great deal of other information and resources. This search can be helpful in looking for an apartment in an area you will be moving to.
•Drive around to the neighborhoods that you are interested in living. Look for signs at apartment complexes that post any availabilities and contact information.

•Make sure you are being shown the apartment you will be renting and not a model.

•Be prepared by creating a list of questions to ask and features to look for when you view the apartment. Make sure you see the apartment in the daytime so you know how much natural light it gets.

•Prioritize your needs and preferences in an apartment prior to viewing the apartment. What are you looking for? (washer/dryer, ac, fireplace, dishwasher, etc.) What feature in an apartment is the most important to you?

What to ask
•What is the monthly rent and does it include any utilities (heat, water, gas, electric)?
•How long is the term of the lease? (legal contract giving you the right to occupy the apartment if you pay rent on time and meet all conditions of the contract)
•What happens at the end of the lease? (sign a new lease or rent month-to-month)
•What facilities are provided? (laundry, cable hookup, parking)
•Are pets allowed? (if so, what does it cost and is there a limit)
•What rules and restrictions are there for tenants?
•What type of security is provided? (intercom system, security guard)
•What steps are there for requesting repair or pest control for the apartment?
•Is there a current conditions statement for both the landlord and renter to sign?
•Are there any charges for clean up, etc. you will be charged when you move out?
A Lease Should Include
•Amount of monthly rent and when it is due.
•Penalty for late payment.
•Amount of security deposit and conditions under which it will be returned.
•Who pays utilities (electricity, water, gas) repairs, insurance.
•Conditions for eviction (forced to move out) such as noise level.
•Conditions for renewing lease.
•Condition of apartment - take photos, document condition of apartment when you move in and have landlord sign to protect yourself when you move out.

Rights and Duties of Tenants
•Entitled to peaceful living conditions.
•Entitled to use property for any purpose for which is suitable (not illegal).
•Pay rent on time.
•Comply with all terms of lease.
•Give notice when vacating (breaking lease) except when lease has expired.
•Day-to-day repairs.

Rights and Duties of Landlord
•Must give notice to tenant, usually 24 hours, before entering premises (unless emergency).
•Entitled to take possession of property at expiration of lease.
•In some states, through legal proceedings, the owner may seize personal property of the tenant and have it sold to pay rent that is due.
•Pay property taxes and insurance on the building.
•Pay for all structural repairs: roofing, plumbing, electrical work, and heating.

Residency
When applying for residency (application to inhabit the apartment), you will need the following information:
•Pay stubs/ tax returns to show all income.
•Names of all occupants.
•Personal references.
•Current address and previous addresses, including how to contact landlords.
•Current employment and previous employment.
•Prior convictions for crimes or prior evictions from property.

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Mortgage
A mortgage is a loan to buy real estate, such as land or a house. If you fail to repay your mortgage (default) the lender can take your home to repay the loan.

Down Payment
Percentage of the purchase price paid up front; can be as low as 3-5% but if you don't put down 20% you have to pay private mortgage insurance (PMI) which protects the lender in case you default.

mortgage Payment
A mortgage payment is made up of four components - PITI (Principal, Interest, Taxes, Insurance):
•Principal - amount you borrow divided over the length of the loan
•Interest - percentage of the principal, cost of borrowing money
•Taxes - property taxes for the year, divided into a monthly cost
•Insurance - homeowner's insurance to protect property against catastrophic loss

Fixed-Rate Mortgage
•Predictable payments - fixed monthly payments for the life of the loan.
•Protection from rising interest rates - rate is fixed for the life of the loan.
•Typically involves the highest interest rate of any loan because rate is guaranteed.
•Loans are usually for 15, 20, or 30 years.

Adjustable-Rate Mortgage (ARM)
•Fluctuating payments - monthly payment will rise and fall with changes in economy.
•Lower beginning rate than a fixed-rate mortgage so you can afford a more valuable home.
•Contract must specify how often and by how much rates can change.
•Loans are usually short-term from one to seven years.

Points
Points are service fees charges by mortgage lenders; one point is 1% of the loan amount. You can also lower the interest rate on your loan by paying points up front.

Closing Costs
are a number of fees paid to the lender for tasks related to completing your loan.
Interest is the biggest part of your payment at the beginning of the loan. Over the length of the loan, this really adds up.

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