Chapter 3

Question 1

TYPES OF HOUSING

Answer 1

-Apartment complexes: groups of apartment buildings with a number of units.

-The condominium: popular form of residential ownership, particularly for people who want security of owning a property w/out the care and maintenance of a house.

-A cooperative: similar to a condo in that it also may offer units with shared common facilities. Unlike condos “the owners do not actually own the units, instead they buy shares of stock.

-Planned unit development (PUD) also called master-planned communities: merge such diverse land uses as housing, recreating facilities, and commercial concerns in one self contained development.

-Retirement communities: often are structured as PUD’s. They are often located in temperature climates and may provide shipping, recreational opportunities, and health care facilities in addition to residential units.

-High-rise development (also called mixed-use development MUD): combine such elements as office space, stores, theaters, and apartment units into a single vertical community.

-Converted-use properties: are factories, warehouses, office buildings, hotels, schools, places of worship or churches, and other structures that have been converted to residential use.

-Manufactured housing: Including mobile homes

-Modular Homes: pre-assembled at a factory.

-Time-shares: allow multiple purchases to share ownership or use of a single property, usually a vacation home, in intervals.

Question 2

HOUSING AFFORDABILITY
The home ownership rate in 2020 in the USA was 65.3%.

What is involved when making a decision of whether to buy or rent property?

Answer 2

-How long a person wants to live in a particular area.
-A person’s financial situation,
-A person’s credit score,
-housing affordability,
-current mortgage interest rates,
-tax consequences of owning versus renting property, and
-what may happen to home prices and tax laws in the future.

Question 3

OWNERSHIP EXPENSES AND ABILITY TO PAY

PITI

Answer 3

PITI

-Principal
-Interest
-Taxes
-Insurance

Question 4

WHAT FINANCIAL ADVANTAGES FOR A HOME BUYER ARE THERE?

Answer 4

1. If property values increases, a sale could bring in more money than the owner paid, creating a long-term gain.
2. As the total mortgage debt is reduced through monthly payments, the owner’s actual ownership interest in the property increases. (This increasing ownership interest is called equity and represents the paid-off share of the property held free of any mortgage) .
   EQUITY= CURRENT MARKET VALUE-PROPERTY DEBT
3. The third advantage of ownership is in the tax deduction available to homeowners but not to renters.