Financial Applications: Housing & Mortgage

Transcript

4. 3 1) Find Monthly Gross Income (Annual / 12) 2) Find 28% of monthly income to estimate affordable amount to spend on housing per month. 3) Calculate how much he pays in taxes (25% of income) 4) Find amount of $ remaining
5. 4 Taxes (24%): CC's (15%): Student Loan (15%): Rent:
6. Application deposit: ___________ Credit Report Fee: ___________ Security Deposit: ___________ Last Month’s Rent: ___________ Broker’s Fee: ___________ First Month’s Rent: ___________ Application deposit: ___________ Credit Report Fee: ___________ Security Deposit: ___________ Last Month’s Rent: ___________ Broker’s Fee: ___________ First Month’s Rent: ___________ 5 FIND
7. Name: ________________________ 1. Use the interval 25%–30% to find the monetary range that is recommended for the monthly housing budget in each situation. Round to the nearest dollar. a. ​Mark makes $86,000 per year. b. ​Linda makes $7,000 per month. c. ​Meghan makes $1,500 per week. 2. Jessica’s financial advisor believes that she should spend no more than 28% of her gross monthly income for housing. She has determined that amount is $1,400 per month. Based on this amount and her advisor’s recommendation, what is Jessica’s annual salary? 3. ​Abe makes $18.50 per hour. He works 37 hours a week. He pays 23% of his gross earnings in federal and state taxes and saves 5% of his monthly gross income. He is considering renting an apartment that will cost $1,500 per month. a. ​Is this monthly rental fee within the recommended 25%–30% housing expense range? b. ​Based upon his expenses, can he make the monthly payments? 4. Rachel is considering moving into a one-bedroom apartment in Glen Gardens. The apartment has a monthly rent of $1,300. Here are the fees that she has been quoted. How much is she expected to pay up front in order to rent this apartment? 6
8. 5. Milena has a gross biweekly income of $2,200. She pays 18% in federal and state taxes, puts aside 10% of her income to pay off her school loan, and puts 5% of her income aside for savings. She is considering an apartment that rents for $1,200 per month. a. ​Is this monthly rental fee within the recommended 25%–30% housing expense range? b. ​Based on her expenses, can she make the monthly payments? 6. Ann obtained this list of apartments. a. Use linear regression analysis to determine if there is a correlation between the square footage and the monthly rent. b. ​Determine the regression equation. Round the numbers in the equation to the nearest hundredth. c. ​Use your regression equation to determine the price you might expect to pay for an 810-square foot apartment. 7
9. A good home must be made, not bought -Joyce Maynard LESSON 2: READ A FLOOR PLAN Objectives: Compute the perimeter and the area of a polygon Compute the areas of the irregular regions Compute the volumes of rectangular solids Vocabulary: Floor plan: Area: Examining a floor plan allows you to make intelligent decisions before you move in. It helps you determine what furniture will fit in each room. Everybody likes to have ample space that suits their living styles, family size and hobbies. Larger spaces usually are more expensive, so deciding what you want and what you need is a balancing act with what you can afford. What type of apartment would you like as your first place to live in when you move out on your own? 8
10. Example 1: Jerry is using the floor plans for his new home to help him purchase base molding for the place where the walls meet the floor. The plans are drawn using a scale of inch represents 1 foot. He measures the 4 1 walls on the floor plan with a ruler and finds that they total inches. If molding $2.10 per foot, how 3 2 2 1 much will Jerry spend on molding? 9
12. Name_______________________ Practice 1. A rectangular room measures 13 feet by 15 feet. It is going to be carpeted with carpeting that sells for $68 per square yard. a. What is the area of the room in square feet? b. If the room is drawn so ¼ inch represents 1 foot scale, give the dimensions of the room in inches on the scale drawing. 2. A rectangular room is 14 feet by 20 feet. The ceiling is 8 feet high. a. Find the length and width of the smaller wall. b. Find the area of the smaller wall. c. Find the area of the larger wall. d. Find the total area of the four walls in the room. e. A gallon of paint costs $36.50 and it covers 350 square feet on average, what is the cost of painting the room with two coats of paint? Explain. 11
13. 3. Juliana is having one wall of her den covered in brick. She needs to find the area of the wall, excluding the doors and the windows. A diagram of the room is shown. a. Juliana creates a scale drawing to bring to the contractor, She uses the scale ¼ inch represents 1 foot. Copy the diagram and label the scale drawing dimensions in inches. b. Find the area of the all that will be covered in brick. (in feet). c. If the brick, the installation, costs $18 per square foot, find the total cost of the job. 12
14. There’s no place like home. -Judy Garland “Dorothy” LESSON 3: MORTGAGE PLANNING Objectives: • Compute the monthly cost of paying for a house • Understand the research necessary before you purchase a home What do you need to know about mortgages? Buying a house is probably the most expensive investment you will ever make. ______________ is the amount for which a house could be sold. Home owners pay _______________________, also called _____________________. The ________________________ of a home is an amount used to determine the property taxes. The assessed value may not be the same as the market value. Property taxes help pay for government services, such as schools, libraries and police. After making the required __________________, most people take out a loan to pay the balance owed on their new home. These loans are _____________________. Because interest rates differ, shopping for a mortgage can be important. Mortgage Vocabulary: • Foreclosure: • Homeowner’s Insurance: ********************************************************************************************* • Fixed Rate Mortgage: • Adjustable Rate Mortgage: 13
15. • 30 Year Fixed Mortgage: • 15 Year Fixed Mortgage: • 5/1 ARM: • 3/1 ARM: • Interest Only Mortgage: =(p*(r/12)*(1+(r/12))^(12*t)) / ((1+(r/12))^(12*t)-1 14
16. CALCULATE THIS! What would the total monthly payment be for a $175,000 house in the Town of Lewis with a tax rate of $17.76 per 1000 and an annual home-owners insurance premium of $650? 1​st​ : Calculate annual taxes Monthly Mortgage Payment + Escrow Payment Monthly Payment + Annual Taxes/12 + Insurance 650/12 Use 4% for 30 years =(p*(r/12)*(1+(r/12))^(12*t)) / ((1+(r/12))^(12*t)-1 15
17. LESSON 4: MORTGAGE PAYMENTS & FINANCE CHARGES Example 1: MONTHLY MORTGAGE PAYMENTS Find the ​total monthly payment​ on a $630,000 home in a city with a tax rate of $22.25 per $1000, and a loan with 4% interest rate on a 30-year mortgage. The annual insurance rate is $800. 16
18. Example 2: MORTGAGE PAYMENTS & FINANCE CHARGE Find the total amount paid and finance charge on a $790,000 home with a 30-year mortgage and a 4% interest rate. Find the total amount paid and finance charge on the same home with a 15-year mortgage and a 3% interest rate. What is the difference in finance charges between a 30 and 15-year mortgage for this example? 17
19. “Home is a place you grow up wanting to leave, and grow old wanting to get back to.” LESSON 5: MORTGAGE AMORTIZATION Objectives: • Create and investigate an amortization table for a fixed rate mortgage • Understand how different interest rates, years, and principals affect your mortgage. Amortization is the process of paying of a balance over time with regular, __________________. An __________________________________ is a complete table of periodic loan payments, showing the amount of principal and the amount of interest that comprise each payment until the loan is paid off at the end of its term. A portion of each payment goes towards: ❖ ❖ During the first half of a 30-year _________________________, most of the monthly payment goes to ______________________________, with the very little principal actually paid off. Toward the last 15 years of the loan, you will begin to pay off a greater amount of principal, until the monthly payment is largely principal and very little interest. 18
21. Name:_____________________ MORTGAGE AMORTIZATION SCENARIO: MORTGAGE: $275,000 @ 3.75% interest 1. What is the monthly payment on this loan with a 30 year mortgage? 2. What is the loan balance after the February 2022 payment if you take out a 30 year mortgage? 3. What is the loan balance after the February 2030 payment if you take out a 30 year mortgage? 4. What is the monthly payment on this loan with a 15 year mortgage? 5. What is the loan balance after the February 2022 payment if you take out a 15 year mortgage? 6. What is the loan balance after the February 2030 payment if you take out a 15 year mortgage? 20
23. LESSON 6: MONTHLY PAYMENT WITH DOWN PAYMENT Find the following regarding a $195,000 house with a $25,000 down payment @ 4% for 30 years: Monthly Payment = Total Amount Paid = Finance Charge = Find the following regarding a $275,000 house with a 20% down payment @ 4.25% for 30 years: Monthly Payment = Total Amount Paid = Finance Charge = Zillow Example 1 Address For Sale Price Estimated Monthly Mortgage with No Down Payment Estimated Monthly Mortgage with 10% Down Payment Estimated Monthly Mortgage with 15% Down Payment Estimated Monthly Mortgage with 20% Down Payment 22
24. Zillow Example 2 Address For Sale Price Estimated Monthly Mortgage with No Down Payment Estimated Monthly Mortgage with 10% Down Payment Estimated Monthly Mortgage with 15% Down Payment Estimated Monthly Mortgage with 20% Down Payment 23
25. I long, as does every human being, to be at home wherever I find myself. –Maya Angelou LESSON 7: HOME EQUITY Review of Car Equity Graph 24
27. Name:_______________________________ Home Equity Assignment Choose a house for sale locally on Zillow. Calculate the principal with a 15% down payment. Enter the principal, 4% interest, 30 year term into the Amortization Table. Graph the appreciation equation on desmos.com. Use the desmos graph and amortization table to find equity. 1. What is the address of your home example? 2. What is the sale price? 3. What is the loan principal after a 15% down payment? 4. What is the value of the home after 10 years? 5. What is the loan balance after 10 years? 6. How much equity do you have after 10 years? 26