Part 3: City Comparison - PWR Transitional Math

 Buying a House Teacher Notes:Part 1: Career and Salary Data – Students will research the salary for their chosen career. They will need to collect 3 data points to use to come up with their salary. This will be an amount the students will need to justify how and why they chose this amount based on the data they collected.This section should take 30 minutes and can be done as a homework assignment after a discussion and a preview of the websites and how to find the information on them.Site addresses are hyperlinked in the document.Bureau of Labor and Statistics - Board – purpose of this section is for the students to research their income potential and estimate (by any means) their possible annual income when they are 30. They will be using this income figure for the rest of their task.Part 2: House Description – Students will describe the features they are looking for in a house. Amount of bedroom and baths they state should be included in all other searches they do. Other amenities and things the student wants to include but may vary from search to search. The purpose of this section is for students to start to think about all the things they would like in their house and how it could possibly change the prices of their homes. Part 3: City Comparison – Students will use websites to choose 3 different cities they would like to live in to research home prices. They are doing a quick search comparing the basics they are looking for in a home in 3 different locations so they can see the difference in home prices and property taxes. Use Zillow or Realtor sites. Both sites allow for input of searches and zip codes.The purpose of this section is for students to see that similar houses can vary in price and property tax depending upon where they live. Part 4: Shop for a Home - Students will use a website like or to find 5 houses that meet, or come close, to their home descriptions from part 2. Student can use homes in different cities like they did in part 3. Student should complete the chart for each home they find which includes a picture and website link to the listing.The purpose of this section is for students to search for a home that meets their criteria and experience seeing how home prices can vary.Part 5: Calculating a Mortgage – Students will do a quick prediction of which scenario they think will be the best for them. Students should do this prior to starting calculations but after reading the descriptions and finding the interest rates. This prediction will be used later and will give students something to evaluate with later. Students will use to find the current rates of a 15 and 30 year fixed mortgage. It is recommended that this is done as a whole group so the entire class will be using the same values for this section of the task.The student will complete 3 different down payment scenarios with both a 15 and 30 year fixed mortgage. The teacher can review the other mortgage options but this task is limited to this specific type of mortgage for ease of the teacher. Students will calculate the PMI, if needed, homeowners’ insurance, and the monthly mortgage amount. Students need to show work for their calculations as part of meeting the indicators of the competencies measured in this task. If the teacher allows this section to be completed electronically then the student must turn in their math work to support and justify their work.The purpose of this section is for students to perform the calculations to compute their monthly payment for their home. Part 6: Affordability – Students will complete the chart to see if they can afford their home based on their chosen career, estimated salary, and selected mortgage plan. Students will need to analyze the calculations and determine if they can actually afford the home. Students are expected to justify their reasons and support this both mathematically and logically. Students can include reasons such as, yes because I am planning on being married and my spouse’s income will be able to support the gap.The purpose of this section is for students to analyze their income and mortgage plan and make a logical decision on their calculations.Part 1: Career and Salary DataCareer: Select a career that you believe you will be in when you are 30 years old. Determine how many years’ experience you may have at this position by the time you are 30.Career Choice: _____________________________________You are 30 years old, based on ______ years in college to earn the appropriate degree/licensure you have been working in your position for _______ years.Salary Data: Use the links below to gather salary data salary for your career. When finding data take into account your experience on the job. When estimating your final annual salary it is important to recognize that the average hourly earnings are just that – an average. As a new employee you can expect to earn 80% of this average in the first year, 82% in the second, 84% in the third, and so on.College Board and Bureau of Labor StatisticsSalary Data PointsSalaryMeasure of Central TendencyYearLocation$32,750Median2014TexasBased on the data above estimate your annual salary for the age of 30. Describe how you calculated this and show your mathematical support for your estimate.Annual Salary: ___________________25401101600Description254011016003530600101600Mathematical support3530600101600Part 2: House DescriptionDescribe features you want in your house. Some of these are the features your future searches will need to include while other features your want but may vary.4953000165100Other Amenities: 4953000165100Must Include:Would like to include:BedroomsGarageBathroomSquare FootYardLevelsPart 3: City ComparisonUse a website like or to choose three different cities in which you would like to live. Use the information from the website to complete the chart. SIMILAR Style homes with similar features.Site Used: ____________________________________________City/StateHome PriceBedBathSq FtEstimated Property TaxEstimated Property Tax RateHow does the price of your home change depending upon the city?How does the property tax change depending upon the city?Part 4: Shop for a HouseUse websites like and to search for five actual homes you would buy. Include the link to the information and a picture of the home. Complete the chart.Home #1PictureDescriptionBedrooms _______Baths _______Other amenities and FeaturesSquare FootList PriceLot SizeEstimated Property TaxCity, StateLink to listingHome #2PictureDescriptionBedrooms _______Baths _______Other amenities and FeaturesSquare FootList PriceLot SizeEstimated Property TaxCity, StateLink to listingHome #3PictureDescriptionBedrooms _______Baths _______Other amenities and FeaturesSquare FootList PriceLot SizeEstimated Property TaxCity, StateLink to listingHome #4PictureDescriptionBedrooms _______Baths _______Other amenities and FeaturesSquare FootList PriceLot SizeEstimated Property TaxCity, StateLink to listingHome #5PictureDescriptionBedrooms _______Baths _______Other amenities and FeaturesSquare FootList PriceLot SizeEstimated Property TaxCity, StateLink to listingNow that you have looked around, which home do you select and what factors went into your selection?Part 5: Calculating a MortgageUse the home your selected in part 4 and complete the following scenarios for calculating your monthly mortgage payment. Show math justification in the spaces provided for each scenario. Find the current percentage rate for 15 year and 30 year fixed mortgage rate. This will be the rates used in the rest of this part.Current rate for 15-year fixed mortgage ________Current rate for 30-year fixed mortgage ________0% and 10% down payments require a 1% PMI (Private Mortgage Insurance) of the total amount borrowed. This PMI is a yearly charge that is added monthly to the mortgage amount. To calculate the monthly PMI amount you will need to find 1% of the total amount borrowed split over twelve months.Amount borrowed is the price of the home less the down payment.Monthly mortgage is calculated using: M=P(r(1+r)n(1+r)n-1) M – Month paymentP – Principal (total amount borrowed)r – rate (written as a decimal)n – total number of paymentsMonthly property tax is the estimated property tax from part 4 split over twelve months.Homeowners Insurance can be approximated by 0.35% of the value of the home. This is a yearly charge that needs to be split over twelve months.114300660400Prediction:Which scenario do you think will be the best scenario for you and why?114300660400Scenario #1 – Zero Percent Down15-Year Fixed30-Year FixedPrice of HomeDown Payment AmountPrincipal - Amount BorrowedInterest RateMonthly Mortgage PaymentMonthly PropertyTaxesMonthly PMI AmountMonthly Homeowners InsuranceTotal MonthlyPaymentTotal of all mortgage paymentsTotal interest paid over the course of the loanScenario #2 – Ten Percent Down15-Year Fixed30-Year FixedPrice of HomeDown Payment AmountPrincipal - Amount BorrowedInterest RateMonthly Mortgage PaymentMonthly PropertyTaxesMonthly PMI AmountMonthly Homeowners InsuranceTotal MonthlyPaymentTotal of all mortgage paymentsTotal interest paid over the course of the loanScenario #3 – Twenty Percent Down15-Year Fixed30-Year FixedPrice of HomeDown Payment AmountPrincipal - Amount BorrowedInterest RateMonthly Mortgage PaymentMonthly PropertyTaxesMonthly PMI AmountMonthly Homeowners InsuranceTotal MonthlyPaymentTotal of all mortgage paymentsTotal interest paid over the course of the loanBased on scenarios above which fixed year mortgage and down payment would you choose and why? Support your reasons mathematically as well. -761992390775Predication Check:How did your prediction about the mortgage plan work?-761992390775Part 6 AffordabilityNow it is time to see if you can afford the home with the mortgage plan you selected. Using the salary from Part 1 and the mortgage plan from Part 5 complete the chart below to see if you can afford your home. Show math calculations.Average annual income tax is approximately 25% of annual salary is the salary a person takes home after taxes.Financial advisors say that a person’s monthly house payment should not exceed 28% of their monthly income.Annual SalaryAverage Annual Income TaxesNet Annual SalaryMonthly Salary28% of Monthly SalaryDo you purchase this home? Support your reason. ................
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