Housing Options & Related Expenses

Introduction

To rent or to buy? It can be a tough decision! In this microlesson, we will take a look at the expenses that come with purchasing a home using mortgage loans. There are advantages of owning a home, but it is still a very expensive purchase. Take a look below at the unexpected costs of renting and home ownership. Can you think of other advantages and disadvantages of each decision?

Unexpected Costs of Renting

Laundry - The use of a washer and dryer at a laundromat costs approximately $2.50 per load. Washing 20 loads per month would cost about $600.00 a year!

Parking - Some rentals include parking, but if they don't, the median monthly parking rate is $153.79. This cost largely depends on which city you live in.

Moving - Moving your stuff into a new rental could cost about $375.00+.

Unexpected Costs of Home Ownership

Garbage Collection - Expect to pay about $144.00 - $240.00 a year for curbside pickup.

Pest Control - Be prepared to shell out at least $700.00 to keep spiders, ants, and roaches at bay.

Yard Care - Hiring a gardener or landscaper can cost about $1,200.00 a year!

Security - A security system can cost about $100.00 - $1,500.00 for initial setup and then anywhere from $95.00 - $480.00 a year for monitoring.

Lesson Preview

In this module, we will study the following topics:

Mortgage Loans: Learn about the different options in home mortgage loans and how much interest you will end up paying!

Home Insurance and Taxes: Take a look at the aspects that are involved in home insurance as well as how to calculate real estate taxes.

Rentals, Condos, and Other Costs: Explore your options! What costs are involved in renting versus owning a house? How might we use graphs to help predict future costs?

Reading Floor Plans: Discover the math involved in home repairs that deal with square footage and ordering materials.

Key Terms

The following key terms will help you understand the content in this module.

Asset – Economic resources; anything that is capable of being owned or controlled to produce value.
Balloon Payment – When you hold back most of a debt and pay it only towards the end of the agreement; the debt is inflated like a balloon due to compound interest accumulating on the large sum.
Closing Costs - Fees for lawyers, credit checks and title searches, taxes, and the preparation of the documents.
Down Payment - An initial payment made when something is bought on credit; with mortgages, this amount is typically between 10% and 40% of the selling price of the home.
Finance Charge – Any fee representing the cost of credit, or the cost of borrowing.
Insurance Premium - The amount of money charged by an insurance company for coverage.
Interest - A charge for the use of the money of a lending institution.
Loan Origination Fee - A fee the bank charges for granting you the loan.
Mortgage Loan - A loan secured by real property through the use of a mortgage note which evidences the existence of the loan and the burden of that realty through the granting of a mortgage that secures the loan.

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