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Chapter 2
Concepts of Homeownership
| Question | Answer |
|---|---|
| What are the advantages of ownership? | pride of ownership, long-term investment, control and stability |
| What are the responsibilities and disadvantages of ownership? | property taxes, ownership costs, maintenance costs, required compliance with zoning and other laws |
| The different housing types are... | single family, multi-family, condominium, cooperative, townhouse, planned unit development, retirement community, mixed use development, manufactured housing, modular housing, mobile home, timeshare |
| What are the desirability features? | location, age, condition, appearance, appeal, neighborhood, appreciation |
| What are the capital gains exclusions? | If you have a capital gain from the sale of your main home, you may qualify to exclude up to $250,000 of that gain from your income, or up to $500,000 of that gain if you file a joint return with your spouse. |
| Homeowner's package policies cover... | dwelling, personal property, other structures, loss of use, personal liability, medical payments |
| What losses are typically covered by homeowner's insurance? | Fire, lightning, aircraft, vehicles, vandalism, theft, explosion, riot, smoke, windstorm, hail, hurricane, sudden water damage, vacancy, mold, water damage from seepage |
| What losses are typically NOT covered by homeowner's insurance? | flooding, earthquakes, insects, rodents, plumbing in unoccupied building, storm damage to landscaping, wear and tear maintenance |
| Two types of insurance policies sold in Texas are... | all risk and named perils |
| Insurance usually offer two types of coverage for damaged items, called.... | replacement costs and actual cash value |
| To decide whether to sell a policy and at what price, insurance companies use a process called... | underwriting |
| Factors in setting premiums are... | age and condition, replacement cost, quality of materials, location, fire protection, claims history (CLUE report) and credit scores |
| Other insurances include... | flood, windstorm and hail, earthquakes, endorsements, personal umbrella liability , renters, condominiums,townhouse, mobile homes, farm and ranch |
| What are the costs of ownership? | purchase price, property taxes, repairs, maintenance, utilities, decoration, furnishing, insect control, association fees, financing costs |
| What are the types of mortgages? | fixed rate, adjustable rate, conventional, jumbo, government-backed, short-term, long-term |
| Mortgage payments (PITI) typically includes | principal, interest, taxes and insurance |
| To measure ability to take on housing debt, lenders use | debt and income ratios; also consider income stability, growth prospects, net worth and credit rating |
| Texas programs for first-time buyers assist with... | down payment and interest rate |
| What does a SINGLE-FAMILY UNIT mean? | a freestanding residential building intended as a single dwelling unit; structure usually has direct street access and does not share building systems with another structure |
| What does a MULTI-FAMILY UNIT mean? | consists of multiple dwelling units contained within a single structure or multiple buildings in a complex |
| What is a CONDOMINIUM? | a form of ownership where owners hold a fee simple interest in the airspace in their units and an undivided share as tenants in common in exterior walls, hallways and other common areas and facilities; the property is operated by an association owners pay |
| What is a COOPERATIVE? | a unit in a larger structure in which residents own shares of stock in the cooperative association and a proprietary lease to a particular unit instead of owning the unit |
| What is a TOWNHOUSE? | like a single-family home connected to other units, where the land underneath the home is individually owned as well as the structure itself, excluding the party wall or other shared connections |
| What is a PLANNED UNIT DEVELOPMENT? | a type of subdivision in which owners of residential units belong to a homeowners' association that owns and maintains common areas and improvements for the benefit of the members; membership must be automatic and non-severable for each unit |
| What are TAX DEDUCTIONS? | provisions that reduce the taxable income |
| What is EQUITY BUILDUP? | increasing the difference between home value and the amount owed on the mortgage |
| What is the CAPITAL GAINS EXCLUSION? | If the seller is single and used the house as primary residence for two years in the previous five, they can keep up to $250,000 in capital gain without incurring tax liability; married couples can keep up to $500,000 |
| What is a PACKAGE POLICY? | a combination policy providing coverage for several different things |
| What is COVERAGE? | amount of risk or liability that is covered for an individual or entity by their insurance services |
| What is a CLUE REPORT? | the Comprehensive Loss Underwriting Exchange is used to review claims history; CLUE reports list the property insurance claims history of people and houses, regardless of who owned them, for the previous seven years |
| What is FLOOD INSURANCE? | insurance to protect against losses caused by floods; properties in special flood hazard areas are required to have flood insurance for loans |
| What is an ENDORSEMENT? | add coverage to a standard policy |
| What is PITI? | portions of a mortgage payment for PRINCIPAL, INTEREST, TAXES and INSURANCE |
| What is UNDERWRITING? | a process used to decide whether to sell a policy and at what price |
| What is QUALIFYING? | the process of determining whether the prospective buyer has the ability to take on a mortgage debt |
Created by:
alli-bohanon
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