Notes

Justin's car was vandalized the third time this month. He wants to move to an apartment building with a garage, but his lease continues for eight more months. Which action should he take?: talk with the landlord about wanting to move and find out what the options and penalties are
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Ken used a wood stove to heat his apartment. After he moved out, the landlord deducted $200 from his deposit in order to clean the chimney. Was the landlord justified in deducting this cleaning cost?: Only if the chimney had more than normal filth because Ken burned unusual material or in an unusual way.
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Jordan's lease expires at the end of December, but he will marry his fiancée Beth in April and move into her house. What is the best way for him to move out of his apartment? : ask his landlord in advance about ending the lease early
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Most mortgage loans take either 15 or 30 years to pay back, but typically homeowners in the U.S. sell houses before paying off the mortgage
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The total cost of a mortgage depends on the interest rate
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Buyers can apply to be pre-approved for a mortgage before they find a house.
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Eliza wants to buy a house, but the bank requires a 5% down payment, which would be $10,000. Eliza does not have that much money available. Why does the bank require such a large down payment?: The bank will only trust Eliza with a mortgage if she also has a serious stake in the house.
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Ken is buying a house and he can get a lower mortgage payment if he gets an ARM instead of a fixed-rate mortgage. What could happen with this type of mortgage over the next few years? : The payment could increase if interest rates increase.
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Tim bought a house. His monthly payment for the principal and interest of his mortgage loan is $1,000. However, the bank charges Tim $1,200 a month. Why is Tim's payment higher than the cost of the loan itself? : The bank collects and pays the home insurance and taxes.
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Jordan wants to take out a $200,000 mortgage but can only afford a $1,000 monthly payment. What is the highest interest rate he can afford for the mortgage? : 4.2%
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Home location is also about a house's resale value, an estimate of what people will pay for it.
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Shae lives 20 miles away from his job in a small but expensive house. He wants to buy a house right next to the factory where he works. Houses there are cheap because many people do not like the smell from the factory and other industries in the area. Which answer does NOT describe factors Shae has to weigh in his decision? : paying more for an easy commute versus paying less for a home in the distant suburbs
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Nina likes a $250,000 house. How can she determine if she can afford it? : if she can pay the mortgage payments, meet other debts, and still save money for repairs and emergencies
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Which of the following events could reduce the sale price of a house? : A home inspector discovers that the hot-water heater does not work.
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Paid by homeowners but not directly by renters----------- Paid by homeowners and renters but not by landlords---------------- Paid by either landlords or renters depending on the terms in the lease
property taxes -------------------------repairing the television ----------cable and Internet
mortgage interest --------------------------- -------------telephone
home insurance --------------------------------- -----------------heating oil or gas
plumbing -----------repairs----------electricity
maintaining the hot water heater
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Better suited for Home owners------------ Better suited for Renters
stability------------------------- large debts
large savings accounts -----------------------flexibility
steady income -------------------------not mechanically inclined
owner of three dogs ---------------------------business traveler with a 70 hour work week
do-it-yourself hobbyist
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Reaxons to buy houses
Reasons to buy------------ Reasons not to buy------------ Not a factor
interest rates are low------------ interest rates are high ---------stock prices are high
home prices are low------------- home prices are high ------------stock prices are low
----------------------------------------------------------------stock prices will be high in five years
----------------------------------------------------------------home prices will be high in five years
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(Total Monthly Payment) ÷ 0.30 = (Required Monthly Take-Home Pay)

For example, at a 13% interest rate, the total monthly payment on a $200,000 mortgage is $2,600.74. So,

$2,600.74 ÷ 0.30 = $8,669.13

If interest rates were that high, there would be no way that Susan could afford the roughly $2,600 in monthly payments unless she got a much better paying job.