The Rant's mission is to offer information that is useful in business administration, economics, finance, accounting, and everyday life. The mission of the People of God is to be salt of the earth and light of the world. This people is "a most sure seed of unity, hope, and salvation for the whole human race." Its destiny "is the Kingdom of God which has been begun by God himself on earth and which must be further extended until it has been brought to perfection by him at the end of time."
Saturday, October 20, 2018
Personal Financial Planning: An "How-To" Guide (part 24)
You might notice some unusual activity on the Missouri River on the southeast side of Great Falls in the coming days. The City of Great Falls ...
Meeting Housing Needs: Buy or Rent?
by
Charles Lamson
Knowing when to buy your first home is not always clear-cut. There are many factors to consider before taking on such a large financial responsibility. In the next few posts, we will explore some of these, and how to approach the home buying process.
Because you have your own unique set of likes and dislikes, the best way to start your search for housing is to list your preferences and classify them according to whether their satisfaction is essential, desirable, or merely a "plus." This exercise is important for three reasons. First, it serves to screen out housing that will not meet your minimum requirements. Second, it helps you recognize that you may have to make trade-offs because seldom will you find a single home that meets all your needs. Third, it will help you focus on those needs for which you are willing and able to pay.
Housing in America is diverse, and everybody's housing needs differ. Some people prefer quiet and privacy; others like the hustle and bustle of big-city life. The features you prefer vary as well, from gourmet kitchens to an extra bedroom for a home office. You will find single-family homes, townhouses, condominiums, corporate apartments, or numerous types of rental units that meet your needs.
What Type of Housing Fits Your Needs?
One of the first decisions you will have to make is the type of housing unit that meets your needs. Several of the following may be suitable:
Single-family homes: These are the most popular choice. They can be stand-alone homes on their own legally defined lots or row houses or townhouses that share a common wall. As a rule, single-family homes offer buyers privacy, prestige, pride of ownership, and maximum property control.
Condominiums: The term condominium, or condo, describes a form of ownership rather than a type of building. Condominiums can be apartments, townhouses, or cluster housing. The condominium buyer receives title to an individual residential unit and joint ownership of common areas and facilities such as lobbies, swimming pools, lakes, and tennis courts. Buyers arrange their own mortgages and pay their own taxes for their units. They are assessed a monthly homeowners' fee for their proportionate share of common facility maintenance costs. The homeowners' association elects a board of managers to supervise the buildings and grounds. Condominiums generally cost less than single-family, detached homes because they are designed for more efficient land use and lower construction costs. Many home buyers are attracted to condominiums because they do not want the responsibility of maintaining and caring for a large property. Exhibit 1 lists some of the key things to check before buying a condominium.
Cooperative apartments: In a cooperative apartment, or co-op, building, each tenant owns a share of the nonprofit corporation that owns the building. Residents lease their units from the corporation and pay a monthly assessment in proportion to ownership shares based on the space they occupy. These assessments cover the cost of service, maintenance, taxes, and the mortgage on the entire building and the actions of the board of directors, which determines the corporation's policies. The cooperative owner receives the tax benefits resulting from interest and property taxes attributable to his or her proportionate ownership interest. Drawbacks of co-op ownership include difficulty in obtaining a mortgage (because many financial institutions do not like taking shares of a corporation rather than property as collateral), rent increases to cover maintenance cost of vacant units, and the need to abide by the capital improvement decisions of the co-op board of directors which increases the monthly assessment.
Rental units: Some individuals and families choose to rent or lease their place of residence rather than own it. They may be just starting out and have limited funds for housing, or they may be uncertain where they want to live. Perhaps they like the short-term commitment and limited maintenance. The cost and availability of rental units varies from one geographic area to another. Rental units range from duplexes, four-plexes, and even single-family homes, to large, high-rise apartment complexes containing several hundred units. Renting does come with restrictions, however. You may not be allowed to have a pet or make changes to the unit's appearance.
*SOURCE: PERSONAL FINANCIAL PLANNING, 10TH ED., 2005, LAWRENCE J. GITMAN, MICHAEL D. JOEHNK, PGS. 188-190*
No comments:
Post a Comment