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Car Home Decision 1

Own home and land it sits on as well as shared ownership of the development ... Protection from rising rent costs. Potential source of cash with home equity loan ...

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Car Home Decision 1

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    Slide 1:Car and Home Decision Part 1

    Financial Planning - Yates

    Slide 2:Smart Buying Process

    Step 1: Do your homework Is the purchase a need or want? Consider alternative products and features. Does the purchase fit your budget? Step 2: Make your selection Comparison shop: price, product features, and quality. Be informed: check library and Web sources.

    Slide 3:Smart Buying Process (contd)

    Step 3: Make your purchase Negotiate the price. Evaluate financing alternatives. Complete the purchase. Step 4: Maintain your purchase Resolve complaints; keep good records.

    Slide 4:Transportation Needs

    Step 1: Narrowing your choice Step 2: Picking your vehicle Step 3: Making the purchase Step 4: The lease-versus-buy decision Step 5: Maintaining your purchase Step 6: Consumer protection and your car

    Slide 5:Step 1: Narrowing Your Choice

    Consider your lifestyle and needs versus wants. Look at the alternatives. Fit your car into your budget; calculate the payment.

    Slide 6:Step 2: Picking Your Vehicle

    Do your comparison shopping via the internet or publications: Compare price Compare features Compare quality Determine what is available in your price range. Test-drive the exact vehicle you are considering.

    Slide 7:Step 3: Making the Purchase

    Take advantage of sales, but negotiate the price: Know the dealers cost of the vehicle and any holdback. Understand the various dealer markups. Be aware of any rebate(s)

    Slide 8:Step 3: Making the Purchase (contd)

    Evaluate financing alternatives: Determine the length of financing. Shop around to find the best interest rate. Choose a financing period and rate to give you an affordable monthly payment. Consider a lease: Negotiate a fair vehicle value and a low rent or finance charge. Choose a vehicle with slow depreciation.

    Slide 9:Step 4: The Lease-Versus-Buy Decision

    Closed-end leases, or walk-away leases: Normally offer a purchase option Require the dealer to be responsible for resale Account for about 80% of all leases Open-end leases: Compare the market value to the leases residual value of the vehicle Are to be avoided because you pay the difference

    Slide 10:When is Leasing a Good Option?

    If you are financially stable If you drive less than 15,000 miles annually If you take good care of your vehicles If you use your vehicles for business travel If you do not modify your vehicles If the vehicle you are considering doesnt depreciate too quickly

    Slide 11:Calculating Your Monthly Lease Payment

    Your lease payment depends on the following factors: Agreed-upon price Up-front fees Down payment or trade allowance Residual value Rent or finance charge Length of the lease

    Slide 12:Step 5: Maintaining Your Purchase

    Read the owners manual and perform regular maintenance. Dont ignore warning signals. Choose a good garage; check training and experience.

    Slide 13:Step 6: Consumer Protection and Your Car

    Know and use your warranty. Use the lemon laws, if necessary, to get a refund: Made 4 attempts to fix the problem Car out of service: at least 30 days during the 12 months after purchase or the first 12,000 miles

    Slide 14:Comparing Options for Housing

    Houses typically single-family, free-standing dwellings Cooperatives multi-unit dwellings Condominiums multi-unit dwellings Planned unit developments (PUDs) planned development with common land Apartments and other housing multi-unit dwellings

    Slide 15:Housing Options: Houses

    Advantages: More space Greater privacy Builds equity Disadvantages: Maintenance time and costs Repair costs Resale hassles

    Slide 16:Housing Options: Cooperatives

    Corporate-owned dwellings in which the residents, as shareholders, own stock representative of the value of their unit. (Monthly homeowners fee.) Advantages: Low maintenance More amenities Higher security Disadvantages: Lower capital appreciation Difficult to sell Less privacy Harder to finance

    Slide 17:Housing Options: Condominiums

    Residents have sole ownership of the living space but joint ownership of the land and common areas. Monthly maintenance fee. Advantages: Low maintenance More amenities Higher security Disadvantages: Lower capital appreciation Difficult to sell Less privacy

    Slide 18:Housing Options: Planned Unit Developments (PUDs)

    Own home and land it sits on as well as shared ownership of the development Monthly homeowners fee for maintenance and common expenses Most popular on West Coast

    Slide 19:Housing Options: Apartments and Other Housing

    Advantages: Lower cost Ease of moving (no house to sell) Little upkeep Disadvantages: Limited remodeling ability Limited lifestyle choices (e.g., pet) Less privacy

    Slide 20:Addressing Your Housing Needs

    Housing Step 1: Homework Housing Step 2: Selection Housing Step 3: Making the purchase Housing Step 4: Post-purchase activities

    Slide 21:Housing Step 1: Homework

    Compare your needs versus wants for housing. Compare your options for housing and the costs of each. Weigh your alternatives of renting versus buying.

    Slide 22:Housing Step 1: Homework (contd)

    Determine whats most affordable: Lending standards: Your financial history Your ability to pay The appraised value of the home Maximum mortgage The down payment Pre-qualifying

    Slide 23:Comparing Needs Versus Wants

    Decide on the fundamentals such as bathrooms, bedrooms, and closet space. Decide on property size. Compare other considerations like school systems, proximity to shopping centers, or safety. Consider the future such as additional family members.

    Slide 24:Costs of Housing: Whats Involved in Ownership

    One-time or initial costs Recurring costs Maintenance and operating costs

    Slide 25:Costs of Housing: One-Time or Initial Costs

    Down payment Closing or settlement costs: Discount points Loan origination fees Loan application fee Appraisal fee Other fees and costs

    Slide 26:Costs of Housing: Recurring Costs

    Monthly mortgage payments Maintenance and operating expenses

    Slide 27:Costs of Housing: Monthly Mortgage Payments (PITI)

    Principal what you borrowed Interest the cost of borrowing Taxes support of government Insurance protection of your dwelling and contents Note: T & I are held in an escrow account.

    Slide 28:Costs of Housing: Maintenance and Operating Costs

    Repairs to the structure Replacing an appliance Landscaping

    Slide 29:Weighing the Alternatives of Renting Versus Buying

    Personal and lifestyle considerations Financial considerations: Appreciation with time Tax considerations

    Slide 30:Advantages of Renting

    Mobility No down payment Can be less expensive Protection from declining housing values More extensive amenities No home repair or maintenance No groundskeeping responsibilities No property taxes

    Slide 31:Advantages of Buying

    Build equity in your home Allows for capital appreciation Greater personal freedom Tax advantages Protection from rising rent costs Potential source of cash with home equity loan

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