business HW

BUS-121 Spring 2017 Selecting and Financing Housing Name:

Instructor: Frank Caperino Chap 7 Assignments / Notes

Chapter Assignments: (10 points)

Required: Comparing Mortgages Assignment – Get at least 2 mortgage quotes (but 3 or 4 would be better) for the

mortgage that you would need for the home you want to purchase one day in the future. Use the Comparing

Mortgages Assignment handout. Go to banks, credit unions, mortgage companies, or mortgage brokers. The loan

representatives might get a bit cranky if you tell them you are asking this information as part of a college course

assignment so try not to tell them. (Why should they care? You could be a future customer!) As reported by

www.bankrate.com on February 27 th , the average 30-year loan interest rate was 4.01% and the average 15-year loan

interest rate was 3.10%. Can you do better than either of these? Finally, answer the two comparing mortgages

exercises at the bottom of the assignment. (Hint: Aimloan.com & Cashcall.com are two of my favorite mortgage lenders.)

Page 230: Optional: Problems 6, 7, 9

Page 231: Optional: Question 1

Your Personal Financial Plan: Highly Recommended: Sheets 22, 23, 24, 25

Due: Monday, April 17th.

Chapter Sections:

Evaluating Renting and Buying Alternatives

Home-Buying Activities

The Finances of Home Buying

A Home-Selling Strategy

Chapter Terms:

renting versus buying

lease, lessor, lessee

renter’s insurance

security deposit – (no interest!)

single family residence

condominium

cooperative housing

manufactured housing and mobile homes

zoning laws – CCRs (covenants, codes and restrictions)

appraisal

earnest money

contingency clauses

first mortgage (a.k.a. first trust deed)

down payment

points

conventional mortgage (a.k.a. traditional, fixed-rate, fully amortized) – 30-year versus 20-year versus 15-year

amortization

adjustable-rate mortgage (Beware the Option ARM! Beware negative amortization!)

rate cap

payment cap

graduated-payment mortgage

interest-only mortgage

balloon mortgage

second mortgage (a.k.a. second trust deed, HELOC = Home Equity Line Of Credit)

shared-appreciation mortgage (a.k.a. equity sharing) – between private parties

reverse mortgage – primarily for the elderly – cannot be foreclosed but be careful (There are sharks!)

refinancing

closing costs – appraisal, loan processing fee, title insurance, reconveyance fee, deed, escrow account, etc.

sale by owner versus real estate agent (6% or negotiated)