Housing: the Lease, the Loan Estimate, and the Map

by bam

A housing decision is not a choice between two lifestyles. It is a choice between two contracts, and almost every term that matters is already written on a document somebody is legally required to hand you. This course will not tell you whether to rent or to buy, and it gives no financial advice. It teaches the machinery instead. A lease buys a right to occupy for a term; a mortgage loan buys money and pledges the property back as security, which is why the early payments are almost all interest and why the schedule that proves it is arithmetic anyone can do. Renting is governed by state law, which means there is no national answer about deposits, notice or eviction, so the course teaches how to find the statute that governs your own address and demonstrates the method on one labelled state rather than printing a table that would be wrong in forty-nine places. Buying is governed by two federal forms designed to be laid side by side: the Loan Estimate, which a creditor must deliver within three business days of an application, itself defined as six specific pieces of information, and the Closing Disclosure, which the consumer must receive at least three business days before consummation. Between them sit the good-faith rules that decide which quoted costs may move and by how much, the annual percentage rate that the form itself says is not your interest rate, and the total interest percentage, which states what the loan costs as a share of what was borrowed. The comparison of renting against buying is then done honestly, in the same units, over a stated horizon, with the transaction costs on both ends counted, because the familiar claim that renting throws money away is a conclusion with no arithmetic attached. The last third turns to valuation and to the record. An appraisal is an opinion of value, you are entitled to a free copy of every one, and appraising is written into the Fair Housing Act's own definition of a covered transaction. Then the map: racially restrictive covenants are still in the county land records, a 1948 Supreme Court decision made them judicially unenforceable without erasing them, a university project has mapped hundreds of them in one city, and in at least one state a statute says exactly what an owner may record to strike one from their own deed. It closes by having you read one real document about your own housing.