VIEWS: 5 PAGES: 9 POSTED ON: 11/26/2009
Left Side Activity • List the 3 Lender Rules from pg. 129 and accompany each with a colorful picture. 6.2 Notes • Mortgage Amount = LESS THAN purchase price! WHY? – DOWN PAYMENT • Also, CLOSING COSTS – Fees for transaction; title search (ok to buy), inspections, credit report, taxes, etc…) • POINTS- 1 Point= 1%, 2 Points= 2% etc…WHY? – Banks usually add these costs if they believe interests rates are too low OR you are a HIGH Risk! How much to SPEND 1. Purchase Price/Annual Income < 2 – $150,000/$85,000 = 1.7 So O.K. BUY – $95,000/$35,000 = 2.7 So Don’t BUY 2. Mortgage Pmt/Monthly Take Home < 33% – $1,200/$4,000 = .3 or 30% So Buy – $1,200/$3,000 = .4 or 40% So Don’t BUY 3. Loan Amt/Value of House < 95% – $400,000/$450,000= .888 or 89% So BUY – $195,000/$200,000= .975 or 97.5% So Don’t Financing a HOUSE (pg. 131) Fixed Vs. Flex Interest Rate Changes Monthly Pmt. Changes Terms of Contract Change FIXED Rate FLEXIBLE Financing a HOUSE Fixed Vs. Flex Interest Rate Changes Monthly Pmt. Changes FIXED Rate FLEXIBLE NO (Usually 15- YES (3,5,7 year 30 yr loans) A.R.M.s) NO After initial period YES! Terms of NO YES Contract Change 1. What is the benefit of a FIXED RATE mortgage? 2. Why would I want a FLEX RATE mortgage? Comparing Owning & Renting OWN vs. Rent RenovationMobilityEquity(Investment) Security DepositCost- Owning Your Choice Sell House House should appreciate N/A More expensive Renting Ask Permission Many Options Don’t own, so NO MONEY Paid in advance Cheaper Less Jobs Responsibilities Upkeep Renter’s RIGHTS & DUTIES RIGHTS Use of Property Privacy (Owner call to ENTER) Safety Responsibilities Landlord Reasonable Care Pay on Time (Obey by Lease) Security Deposit for Damages Notify owner of needed repairs Return Full or Partial Deposit Notify tenant of Changes Smoke Detectors Notification of Changes Repair within reasonable time Security Deposit Check List- “Walk Through” w/Detail Notes, Photos, Keep records of all Bills, CLEAN BEFORE YOU LEAVE!! FOCUS QUESTIONS 1. What % does 3 POINTS =? 2. What is the MAX I should spend on a house if I make $75,000 annually? 3. My monthly mortgage payment is $1,000, how much money should I be taking home? 4. What is the benefit of a FLEX RATE? Fixed? 5. Why would I Rent Vs. Owning? 6. How could I improve my EQUITY? 7. What should I do to make sure I get back my Security Deposit? FOCUS: House Buying Rules • You want to purchase a $200,000 House. – 5% down pmt. ________ Mortgage amt._______ – 10% down pmt._______ Mortgage amt.________ – 15% down pmt._______ Mortgage amt.________ – 20% down pmt._______ Mortgage amt.________ • How much should your annual income be? • If you take home $6,000 a month what could by your highest monthly mortgage payment?
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