Financial Services _Çô Client Services RFC121 Chapter 7: RFC121 Chapter 7 - 1
Chapter 7
The Finances of Housing
Learning Objectives - Chapter 7
Evaluate available housing alternatives.
Analyze the costs and benefits associated with renting.
Implement the home buying process.
Obtain mortgage financing.
Develop a strategy for selling a home.
Learning Objective # 1
Evaluate available housing alternatives.
Evaluating Housing Alternatives
▪ Your lifestyle, needs, desires and attitudes are reflected in your choice of
a place to live
▪ Personal preferences are modified by financial factors
▪ Traditional financial guidelines suggest you spend no more than
25-30% of take-home pay on housing, or no more than 2 1/2
times your annual income.
▪ Changes in economy and society no longer make these guidelines
valid
▪ Still need some financial guidelines
Opportunity Costs of Housing Choices
▪ While the opportunity costs of your housing decision will vary, some
common trade-offs include:
▪ Interest earnings lost on money used for a down payment or the
interest on a security deposit for an apartment.
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