Renting vs. Buying HousingRenting vs. Buying Housing

Rental TerminologyRental Terminology

LandlordLandlord

• Owner of property– Expects rent to be paid on time and for tenant

to keep the property in reasonable condition– Usually makes repairs to property– Can charge the tenant if tenant at fault for

damages

TenantTenant

• Person who rents a property from the owner of that property

Application FeeApplication Fee

• Fee when filling out application to rent

• Helps insure that the renter is serious about renting the unit

• Usually $25.00 - $100.00 depending upon the city

Credit Check FeeCredit Check Fee

• Renter pays a fee to have their credit checked prior to the landlord accepting them as a tenant

• The credit check tells the landlord if the renter pays their other bills on time

Security DepositSecurity Deposit

• Fee that renter pays to cover any future damage that the renter might cause to the property

• May be equal to one month’s rent

• Returned at the end of the lease if the property is not damaged

Pet depositPet deposit

• Fee that renter pays to cover any damage that may occur by a pet

• Many landlords allow only certain types or weights of pets

• Some landlords charge pet deposit PLUS a fee per month for the pet

Advance on RentAdvance on Rent

• Landlord requires one or month’s rent in addition to the security deposit

Renter’s InsuranceRenter’s Insurance

• Insurance to cover the renter’s belongings in the event of flood, fire, theft, or any other hazard

• Very inexpensive

UtilitiesUtilities

• Depending on the unit, sometimes the landlord pays for water, sewer, gas,

electricity, and trash collection• Other landlords may require the tenant to

pay for some or all of the utilities as well as telephone and cable

• This should be a consideration for the tenant when choosing a rental unit as it can be a major monthly expense

LeaseLease

• Legal document signed by landlord and tenant agreeing to rent housing for specific period of time

• Should list items such as amount of rent, late fees, address of unit, when amount of rent can be changed, who pays utilities, pets, etc.

• Typical lease is one year

AssignAssign

• To transfer the remainder of a lease to another person

• The original tenant is No Longer responsible for rent or damages

SubletSublet

• Renter leases the property to someone else

• The original renter is still legally responsible for all rent and damages to the property along with the person who is subletting the property

• i.e. college student leaving for the summer and subletting apartment

EvictionEviction

• Legally removing a person from leased property

• The landlord may only start legal proceeding after the tenant has failed to meet the terms of the lease

• The renter must receive a Written legal notice of eviction

Breach of ContractBreach of Contract

• Legal phrase for failure to meet the terms of contract/lease

• Non-payment of rent is the most common type of breach of contract

Buying TerminologyBuying Terminology

MortgageMortgage

A conditional pledge of property to a creditor/bank/financial institution as security for repayment of a debt specifying the terms in reference to length of time to repay the loan, the total amount to be paid, the amount of interest to be paid, and the amount of monthly

payment to be paid

Conventional MortgageConventional Mortgage

• The most common type of mortgage, usually 15 – 30 year term, usually a fixed interest rate

FHA LoansFHA Loans

• A loan that is insured by the federal government against the borrower defaulting on the loan

• Usually has a lower down payment

• Can be fixed or adjustable interest rate

• Any person can apply for this type

of a loan

VA LoansVA Loans

• MUST currently be a member of armed forces or a veteran

• Does not require a down payment and Congress sets eligibility requirements

Terms of LoansTerms of Loans

• Loans may repaid in 15 – 30 years

• Loans are paid in equal monthly payments

Earnest MoneyEarnest Money

• Money that is given as a deposit by the potential buyer to the seller as a good faith gesture to show that the buyer is serious about buying the property

• Can range form hundreds to thousands of dollars

• The $ is held in trust until the closing and applied toward the final price of the home

Agreement of SaleAgreement of Sale

• A legally binding contract that the buyer and seller sign that states all of the conditions and specific terms of the sale

• Includes detailed description of the property, purchase price, amount of down payment, and any items to be included in the sale

SurveySurvey

• Must be completed before the

sale in order to establish that the

building on the land is actually

the same as in legal description

and what the correct boundary

lines are

InspectionsInspections

• Part of the home buying process• Several may be required by the lender or the

state, others are optional– General home – certified home inspector checks for

structural soundness and ensures plumbing, electrical, and heating systems are in proper working order

– Termite – the most common require inspection– Most contracts require the seller to pay fees for

inspections

Closing CostsClosing Costs

• Costs associated with closing of the loan and transferring the property into the name of the buyer

• Most are paid by the buyer, but there are fees that the seller is required to pay

Title SearchTitle Search

• Search to make sure that the seller actually holds the title to the property and no one else has any claims to the property

AppraisalAppraisal

• Valuation of the property

• This can determine how much the lender will loan for a mortgage

Origination FeeOrigination Fee

• Fee paid to the lender for processing the loan

• Usually 1 % of the loan amount

Attorney FeeAttorney Fee

• Money paid to the attorney to represent the buyer at the time of closing