Securing a Living space

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© Family Economics & Financial Education – November 2005 – Housing Unit – Securing a Living Space – Slide 2Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the

University of Arizona

Application form Once a person finds and inspects a living space,

they should complete an application form Application form is a document used to determine a

person’s credit history, financial stability, and references

Before returning this form, a person should know: Is there an application fee and if so, how much is it? Will the fee be returned if the application is denied? Is the person required to rent the living space if the

application is accepted?

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© Family Economics & Financial Education – November 2005 – Housing Unit – Securing a Living Space – Slide 3Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the

University of Arizona

Renting Rent is a payment made in exchange for

occupying another’s land or property Payments can be made to either a landlord or a

property manager by the tenant Tenant-the renter, is the person who rents the

property Landlord is the person who owns the rental unit Property manager is a person who works for the

owner Finds and screens tenants Collects rent Maintains and secures the property Responds to tenants’ needs and complaints

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© Family Economics & Financial Education – November 2005 – Housing Unit – Securing a Living Space – Slide 4Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the

University of Arizona

Types of Rental Agreements

Lease agreement- Written contract specifying the legal responsibilities of both the tenant and landlord

No-lease agreement- Month to month agreement

Not in writing Risky

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© Family Economics & Financial Education – November 2005 – Housing Unit – Securing a Living Space – Slide 5Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the

University of Arizona

Types of Rental Agreements Continued

Written agreement- Short written agreement which is less formal and easier to understand than a lease Rent month to month Allows the renter to make changes to the lease

Oral agreement- Verbalized by the renter and the landlord/property manager Risky

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© Family Economics & Financial Education – November 2005 – Housing Unit – Securing a Living Space – Slide 6Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the

University of Arizona

Lease Agreements A lease must identify the following before

signing: Rent amount Payment procedure Late rent payment penalties

Sometimes tenants can be evicted. Eviction occurs when the tenant does not voluntarily move out after the landlord has given required notice to the tenant

Security deposit amount A security deposit is a one time fee paid in advance to

moving into a living space to cover the costs of repairs or damages to the space beyond normal wear and tear

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© Family Economics & Financial Education – November 2005 – Housing Unit – Securing a Living Space – Slide 7Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the

University of Arizona

Lease agreements continued

Length of the lease Number of people in the rental unit Names on the lease Payment responsibilities for all amenities

Amenities in a living space include water, garbage, electricity, heat, telephone and internet service, and television.

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© Family Economics & Financial Education – November 2005 – Housing Unit – Securing a Living Space – Slide 8Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the

University of Arizona

Lease Agreements Continued

Responsibility for repairs and maintenance Eviction procedures What happens when the lease ends What happens if the lease is broken early Furnishings available Pets Landlord’s access rights to the property Parking Moving-out procedures

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© Family Economics & Financial Education – November 2005 – Housing Unit – Securing a Living Space – Slide 9Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the

University of Arizona

Lease Agreements Continued

Items to identify in lease agreements include: Hanging pictures on the walls Policy on overnight guests Subleasing

Subleasing is when the tenant allows someone else to move in and take over the rent payments

Allowing the landlord to cancel the lease without notification

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© Family Economics & Financial Education – November 2005 – Housing Unit – Securing a Living Space – Slide 10Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the

University of Arizona

Lease Agreements Continued

Allowing the landlord to hold the tenant liable for the remaining lease balance if one day late with payment

Allowing landlord permission to enter rental unit when tenant is not there

Holding the tenant liable for repairs and maintenance

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© Family Economics & Financial Education – November 2005 – Housing Unit – Securing a Living Space – Slide 11Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the

University of Arizona

Security Deposits Security deposit is money paid in advance of

moving into a living space to the landlord to be used for repairs or damage done beyond the expected normal wear and tear Be sure to know the terms regarding the security

deposit Examine the living space and create a list of all

existing damage Take pictures or use a video camera

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© Family Economics & Financial Education – November 2005 – Housing Unit – Securing a Living Space – Slide 12Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the

University of Arizona

Security Deposits Continued

Steps to take to get a security deposit returned: Send a certified letter to landlord/property manager

stating the desire to have deposit returned Send copies of all documents (rental agreement, copy

of security deposit receipt, list of previously existing damage, and pictures)

Take the individual to small claims court Remember, having everything in writing is the

best way to ensure the return of a security deposit

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© Family Economics & Financial Education – November 2005 – Housing Unit – Securing a Living Space – Slide 13Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the

University of Arizona

Renter’s Insurance Renter’s insurance is not required of tenants,

but recommended Renter’s insurance is used to protect the tenants’

personal belongings when renting from a landlord Can protect against theft, fire, or vandalism A person should ask themselves if they could afford

to replace their belongings if a fire destroyed everything-If not, they should purchase renter’s insurance

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Needs and Wants Space Location Amenities Parking Miscellaneous

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Space How many rooms are needed?

Will there be roommates? Monthly charges are typically more affordable when people share the cost

Size of the rooms (total square feet) Number of bathrooms Garage

What is the size of the garage? Storage Space Yard

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Location Distance from work, schools, shopping,

laundromat Consider the walking/biking distance from

school or work Minimize transportation expenses

Neighborhood Safety Quality of schools, streets, and homes Presence of police, fire, and emergency services

Geographic location Urban vs. rural

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Amenities Amenities include utilities like heat, electricity,

garbage, water, and other features like Internet and telephone service

Heat- Examples include electric, gas, and radiant Different heating sources cost different amounts of

money Power- Examples include solar, gas, electric, and

wind Different power sources cost different amounts of

money and have different affects on the environment Who is responsible for paying each bill?

Landlord is the person who owns the rental unit Tenant, or renter, is the one who rents the property

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Parking Location/size Number of vehicles allowed (for self and

guests) Permits needed

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Miscellaneous Washer and dryer

Are hookups or machines provided? Dishwasher

Are hookups or machines provided? Smoking Pets Fireplace Hot tub Snow removal and lawn maintenance

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Determining Housing Costs

Important to choose a rental unit one can afford Create a spending plan

Spending plan is a financial statement used to assist in money management and track income and expenses

Based on this, determine what can be spent on rent and amenities

Rent is the payment made in exchange for occupying another’s land or property, usually paid to landlord or property manager

Property manager is a person who works for the owner to find/screen tenants, collect rent, maintain property, and respond to tenants’ needs

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Housing Costs continued General rule: Households should spend 30% or

less of their net income on housing, not including amenities

Things to keep in mind when determining costs: Determine maximum monthly amount

(including amenities) you can afford and stay below that

Compare the costs of living spacesOne space may not include amenities in the

rent, where another space will. Add in expected costs to compare the two

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Housing Options Houses-Single housing units usually

surrounded by a yard, varying in size Apartments-Sets of rooms on one floor or a

building used as separate residence spaces Studio apartments-Usually one room with

separate space for kitchen and bathroom Mobile homes-Manufactured house that is

capable of being moved

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Housing Options Continued

Condominiums-Single apartment in a multiple housing structure, that can contain multiple stories, garages, and yards

Duplexes-Two apartments, situated side-by-side

Rooms-Private rooms located within another structure

Residence halls-Usually located on college or universitycampuses and available for attending

students

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Housing: Largest Expense for Most

Choose housing that fits your personal needs and spending plan

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Purchasing a Home

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Home LoanMost use credit to purchase a home

Lender determines the maximum amount that can be borrowed and

the credit terms

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Two Significant Initial Expenses

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Mortgage Payment

Mortgage: A payment to pay off the loan used to purchase housing

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What are typical home ownership expenses?

Housing expenses:

MORTGAGE

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Purchasing a $250,000 Home

20% Down Payment

5% Down Payment

Down Payment $50,000 $12,500

Monthly Mortgage Payment $1,158.51 $1,326.90

Total paid $417,062.18 $477,683.21

Scenario 1: Down Payment3.5% Interest Rate 30 Year Loan

780 Credit Score

720 Credit Score

Interest 3.3% 3.5%

Monthly Mortgage Payment

$1,136.33 $1,158.51

Total paid $409,077.76 $417,062.18

$8,708.33 paid for mortgag

e insuranc

e!Scenario 2: Credit Score

$50,000 Down Payment 30 Year Loan

$7,924.42

Additional interest

paidSource: mortgagecalculator.org

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Rent vs. Own Activity Set-up: work in

groups of 2-3 Supplies: piece of

butcher paper and markers

Activity: For both renting and owning, brainstorm: 2 Pros 2 Cons

Rent OwnPros Cons Pros Cons

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Rent OwnPros Cons Pros Cons

Lower move-in cost

Subject to terms of the rental agreement

Potential to gain equity

May have significant negative

effects on credit history is home loan is not paid according to the terms of the loan

Easier to move May have restrictions such as no pets

Tax benefits Large initial cost (down payment,

closing costs)No (or little)

maintenance and repairs

Few or no opportunities for

home improvements (appliances, paint,

etc.)

May improve credit history if the home

loan is paid according to the terms of the loan

Additional expenses

Less responsibility No equity is gained Free to make home improvements

More risky than renting

Typically less expensive than home ownership

No tax benefits No restrictions (unless restricted by

the specific homeowner’s association)

Usually requires additional

resources (time, money) to maintain

Utilities are sometimes

included in rent payment

    Not as easy to move