Math assignment
yleal
BuyingaHome-ProjectWorksheet.docxAQR – Buying a Home: Project Worksheet Name:
Due 11/20
Part I – Considerations when buying a home (5 points)
My 5-10 most important things when I buy a home:
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Part II – How much home can I afford to buy? (15 points)
My Salary Information: Determine your annual and monthly salary below. Paste information supporting your salary information below this line.
Example:
My Job
Job Description: Math Teacher
Annual Salary: $51,234 Monthly Salary: $4269.50
Additional Salary Information: Determine the annual and monthly salary for your significant other below (Optional). Paste the information supporting this salary below this line.
Example:
Significant Other’s Job
Job Description: Accountant
Annual Salary: $69,704 Monthly Salary: $5808.67
Combined gross annual income: $120,938 Combined gross monthly income: $10,078.17
To approximate what you can afford for a monthly payment on a house, take 28% of your combined gross monthly income and record below:
What I (we) can afford to pay for a monthly house payment: $2821.89
Part III – Find your First Home (or Dream Home) (20 points)
Paste a picture of your home below with details about the home, including the address, the number of bedrooms and bathrooms, and the square footage:
Example:
1. What is the price of the home that you found? Home price: $333,990
Lenders prefer that you pay a 20% down payment on the home, though you may be able to pay anywhere from 3.5% to 20% down (First-time buyers and Veterans may be able to take advantage of special financing).
2. What do you feel are the best reasons to put 20% down? Forbes Article
Use the following website (or another source) to answer the following questions: Freddie Mac Website
3. What are escrow payments?
4. What is PMI?
5. What percent of the price of the home do you intend to pay (between 3.5% and 20%)? Explain your
choice. 20%
6. Determine your down payment. $66,798
7. Determine the amount of your mortgage (home loan): $267,192
Part IV – Financing Your Home (20 points)
Paste your finance information below: Zillow Mortgage Calculator
Example:
30 Year Mortgage:
15 Year Mortgage:
Using the financing information you found, complete the following table:
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15-Year Loan |
30-Year Loan |
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Interest Rate: |
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Principal and Interest (P & I): |
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Taxes: |
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Insurance: |
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PMI: |
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Total Monthly Payment: |
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7. Based on what you determined you can afford for a house payment and the monthly mortgage payments for a 15-year or 30-year loan on your home, can you afford either of the two loans? If not, you will need to choose a less expensive home (or up your salary somehow) and recalculate your numbers.
Check the box that applies:
I can afford the 30-year loan. x I can afford either loan.
Part V – A Closer Look at the Numbers (15 points)
Using the information above, complete the following:
Mortgage (Loan Amount): ______________________________
Principal and Interest (P & I) for 15-year loan (monthly): _______________________
Principal and Interest (P & I) for 30-year loan (monthly): _______________________
Use this information to find the following for the 15-year loan and for the 30-year loan:
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15-Year Loan |
30-Year Loan |
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Amount paid towards interest on the first mortgage payment (interest rate/12, times loan amt.): |
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Amount paid towards the balance of the loan: (P & I, minus the interest paid on the first PMT) |
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Total paid over the life of the loan:
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Total interest paid for the loan:
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Part VI – Extra Payments (5 points)
Extra Mortgage Payments Calculator
***Tip: Be sure to enter the mortgage amount, not the price of the home. Use the same APR that you
used in Part IV.
1. By paying an extra $100 monthly, how much will you save in money in paying back your loan (Calculate for both the 15 and 30 year loans)?
b. How many years will it now take to pay back the loan?
2. Based on the information you have completed on financing your home, which loan (15-year or
30-year) are you most likely to choose and why?
Part VII – Closing Costs (10 points)
Click on the following links on closing costs, then answer the questions that follow:
Closing Costs I Closing Costs II
1. What are some of the costs included in closing costs?
2. Closing costs are about what percent of the loan amount?
It generally takes about 30 to 45 days for a home sale to be completed. You normally pay a “good-faith” deposit of about 1% to 2% of the sales price of the home after the seller accepts your offer on the home. Paying more in your good-faith deposit shows the seller that you are serious about purchasing the home. If you back out of the agreement later (without a good reason), you may have to forfeit this money. On closing day, you will pay the down payment and closing costs. Your good faith deposit goes towards these costs. Use the following to estimate what you will pay on closing day.
Down Payment: _________________________
Estimated Closing Costs (3.5% of loan amount): _________________________
Total You Pay at Closing: _________________________
Part VIII – Reality Check (5 points)
1. If you want to have enough for the total closing costs above (including the down payment), how much will you have to save monthly for the next five years at an APR of 2.5% to accumulate that amount?
Tip: Use the Savings Plan Formula for Savings Goals (One of our financial spreadsheets).
Amount to be saved monthly: ______________________
2. What would you have to save monthly for the five years if you could put your money into an account with an APR of 5%?
Amount to be saved monthly: ______________________
Part IX – Closing Thoughts on Buying a Home (5 points)
In doing this activity, what valuable things have you learned about buying a home? Do you plan to purchase a house (or condo, etc.) at some point in your life? Why or why not?
When you have completed this Project Worksheet, email it to:[email protected] [email protected]
The project is tentatively due Friday 20th June
