NAME:



NAME: ECONOMICS

CHS SOCIAL STUDIES CONROY/ROSENTHAL

Personal Finance Project – Buying a Home

The largest purchase you will make in your life will be your home. In this exercise, you will research buying or renting a house, condo, coop or apartment.

➢ Your choice must reflect your income (and any spousal income) as determined by your job choice in Part 1.

➢ You must find a home in the area where you will work.

➢ Your maximum home purchase price will be four times your annual gross income.

➢ We will assume for the purposes of this exercise that you have 20% of the home’s price in your savings, to be used as a down payment.

Task:

1. Determine your disposable (available) income by completing the attached worksheet.

2. Go to (for home purchases on long island), or for national home purchases. On the top left side click the link that says find a home. (You may use any real-estate webpage that lists homes with pictures.)

i. Click the county or region you would like to live- it should be in close proximity to where you will be working

ii. Click search

iii. Select the town / towns you would like to live in. (you can select multiple towns at once to save time, to do this hold the control button while you click the towns with your mouse)

iv. The maximum purchase amount for your home is 4 times your gross

salary. If your pre-tax salary is $100,000.00 the maximum you could spend for a home is $400,000.00

v. Record the price of the home you have found, print and save pictures.

vi. Record any maintenance fees (cooperative apartments and many rental apartments), common charges (condominiums) and/or property taxes (houses, condominiums and some coops) included in the listing on the worksheet.

vii. If property taxes are not mentioned but you have the home’s address, go to to calculate your estimated property taxes. If there is no address, see me for help.

3. After you have found and printed pictures of the home you would like to purchase go to web site

i. On the top left side select compare rates

ii. Then you must select the state

iii. You will be brought to question #2, keep the default answer “purchase a home”

iv. Question #3 asks how much would you like to borrow? You must enter a range. The amount you need to burrow is the price of the house minus a 20% down payment. For example if my home listed at $100,000.00 and I could put a 20% down payment I would only need to burrow $80,000

v. Question #4 asks you about the type of loan you are seeking. Keep the default answer of “fixed rate”

vi. Question #5 asks you about the length of your mortgage: Select 30 year – again the default answer.

vii. When you hit “go” after question number five, the computer will search for the best possible interest rates for your loan. It will give you about ten quotes. You must select the first five( while the text is highlighted go to the file menu and hit File( print ( selection.

viii. Once you have printed the top five rates come up with the average APR interest rate for the first five lenders and record that rate on your print out.

4. One you have printed the top five interest rates, and have averaged the APR rate, click on the button that says calculator on the top right side of the webpage.

i. On the page that you are brought to, select the first blue term (left side) “mortgage loan payment calculator”

ii. Fill in the following fields: “mortgage amount” amount of the house minus the 20 % down payment

“Mortgage term” 30 years

“Interest rate”—this is the average interest rate you calculated at the end of step 2

“Mortgage start date” – use today’s date

“Monthly payments”- leave blank

Extra payments- leave everything blank/ as it appears

Select Show Amortization table

Once you have created the amortization table you must select the first seven years (2008- 20015), while the text is highlighted click file print( select print selection( print.

5. Use the information from the printouts to complete the worksheet; attach the home picture printout, the mortgage printouts and hand in.

NAME: ECONOMICS

CHS SOCIAL STUDIES CONROY/ROSENTHAL

Home Buyers Worksheet

1. What is your annual gross income?

2. Do you have any spousal income?

3. Add Line 1 and Line 2; this is your total family income:

4. Multiply Line 3 by .36. Record that number here: (36% is your approximate total income tax liability).

5. Subtract Line 4 from Line 3. Record the result here: This is your after-tax or disposable income.

6. Divide Line 5 by 12. This is your monthly income.

7. Monthly rent or mortgage payment:

8. Subtract Line 7 from Line 6:

9. Monthly Maintenance or Common Charges?

10. Subtract Line 9 from Line 8:

11. Estimated annual property tax?

12. Divide Line 11 by 12; Monthly Property Tax payment:

13. Subtract Line 12 from Line 10:

14. Monthly Car Payment (from Part 2):

15. Subtract Line 14 from Line 13:

16. Monthly Car Insurance Payment (from Part 2):

17. Subtract Line 16 from Line 15:

Congratulations! You have satisfied your need for transportation and shelter. All other needs (Food and water, clothing, communication, education, entertainment, health, etc.) must be satisfied from the amount remaining on Line 17.

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