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(solution) Hi is there anyway that you could show me how you got the answer


Hi is there anyway that you could show me how you got the answer and since my payment is supposed to be less than 35% of monthly income I would just have to change the payoff term to a different term


HU Quality Enhancement Plan:

 

From These Roots?A Foundation for Life: Mathematics and Financial Literacy MAT 110 ? 04 &06

 

Fall 2015

 

FINANCIAL LITERACY PROJECT

 

Mortgaging a House Worksheet

 

Due 12-03-2015

 

All information must be typed on this Math 110 Financial Literacy Project Worksheet. Student Name: Katherine Albright

 

Course Number and Section: MAT 110

 

Date :

 

Description of house to be purchased:

 

Purchase price listed in the ad: $149,900.00

 

Address____________________________________________________

 

(Number and Street Name

 

City State

 

Zip Code)

 

Realty Company listing the house _______________________________

 

Attach copy of sales ad

 

Attach picture(s) of house

 

Provide the rationale for purchasing this house (1-2 paragraphs):

 

I chose this house because it looks captivating, luxurious and landscaped. This

 

house is quite spacious and is located in a serene neighborhood which is what I

 

have looking for.

 

The home has beautiful view of the surrounding with gentle rolling slopes far in

 

the view from the bedroom window. This is typical for my comfort and stay. 1 MAT 110 FINANCIAL LITERACY PROJECT WORKSHEET Fall 2015 HU Quality Enhancement Plan:

 

From These Roots?A Foundation for Life: Mathematics and Financial Literacy Annual Salary Calculations

 

Grade on test 1

 

Grade on test 2

 

Sum of grades on tests 1 and 2

 

Annual Salary (sum of grades * 385)

 

Monthly gross salary

 

*35% of your monthly gross salary

 

State and federal taxes

 

(28% of annual salary)

 

Savings Account Balance 55

 

84

 

139

 

53515.00

 

4459.58

 

1560.85

 

14984.20

 

29400.00 (multiply the highest of two test grades by 350) Purchased price of house as listed

 

in the ad

 

*Down payment (portion of savings)

 

Principal Amount

 

(Purchase price minus Down payment) 149900.00

 

22485.00

 

127415.00 *Note your down payment must be determined so that your monthly

 

payment will not exceed 35% of your monthly gross salary.

 

Mortgage Plan Calculations

 

Based on your down payment, provide the following information for your mortgage plan. Use Table 1

 

Down payment is what percent of the

 

original house price?

 

Prime loan interest rate----------------15years

 

20 years

 

30 years

 

Use Table 2

 

Credit Score

 

Adjusted Prime-Plus Amount----------------2 15%

 

3.13%

 

3.75%

 

4.00%

 

500

 

.75% MAT 110 FINANCIAL LITERACY PROJECT WORKSHEET Fall 2015 HU Quality Enhancement Plan:

 

From These Roots?A Foundation for Life: Mathematics and Financial Literacy Adjusted loan interest rate------------15years

 

20years

 

30 years 3.88

 

4.50

 

4.75 Monthly Payment Calculations

 

Calculate the actual monthly payment (excluding insurance and property taxes),

 

the total amount paid on the loan and the total interest paid to the bank for all three

 

loan choices:

 

Mortgage Amount: _127415.00_________________

 

TERM

 

RATE

 

Monthly Mortgage

 

payment only

 

Total amount paid A. 15 year loan B. 3.88 20 year loan C. 30 year loan 934.83 4.50

 

806.09 4.75

 

664.66 168269.30 193461.65 239276.50 40854.30 66046.65 111861.50 (principal and interest) Total interest paid Check the loan choice you selected: A B C Provide the rationale for your selection of the loan choice (1 paragraph):

 

I chose A as my loan choice. The reason I chose this 15 year loan is because

 

I would rather pay off my mortgage faster. The 15 year loan is quite expensive and

 

challenging, but I would have paid off this loan in a short period of time as

 

compared to the other loan choices which are relatively cheaper but take long

 

periods to pay.

 

I will have also paid less interest for the mortgage loan for the 15-year

 

period than if I chose 20-year loan or 30-year loan. This will help me in saving

 

enough money for other activities while servicing the loan. 3 MAT 110 FINANCIAL LITERACY PROJECT WORKSHEET Fall 2015 HU Quality Enhancement Plan:

 

From These Roots?A Foundation for Life: Mathematics and Financial Literacy SUMMARY:

 

Calculate the monthly payment including insurance and property taxes. Assume

 

yearly homeowner?s insurance costs of 0.5% of the price of the house. The mil

 

rate for property taxes is $1.24 per hundred dollars assessed value. Assume you

 

will be living in the house and assume the assessed value of the house is the same

 

as the listed price.

 

Loan Amount

 

Term

 

Rate

 

Monthly Mortgage Payment

 

Monthly Tax

 

Monthly Insurance Payment

 

Monthly PMI

 

Total Monthly Payment (PITI)

 

Mortgage Payment is what % of your monthly gross salary 127415.00

 

15 years

 

3.88

 

934.83

 

1858.76

 

62.46

 

100.00

 

2956.05

 

66.29% Finally, attach a one full page summary of your overall experience with the Mortgage Project.

 

This summary page must be double-spaced with a size 12 font and a one inch margin on all four

 

sides. This paper is worth 10% of your overall project grade

 

The Mortgage Project has impacted me with important knowledge for choosing mortgage plans

 

based on a number of factors. After deciding on house to buy based on features that delights and

 

4 MAT 110 FINANCIAL LITERACY PROJECT WORKSHEET Fall 2015 HU Quality Enhancement Plan:

 

From These Roots?A Foundation for Life: Mathematics and Financial Literacy individual, it is necessary for one to determine the effect of paying off mortgage loan on their

 

monthly salary.

 

Firstly, one has to compute their monthly salary based on the two grade test provided. The

 

federal and state taxes will apply for salaried employees and therefore one has to determine the

 

percentage of tax they are paying to the state. For one to own a mortgage, they must at first have

 

some savings in their account. This savings will provide a portion to be used to determine the

 

down payment for a mortgage loan. A principal amount is required for calculating monthly

 

mortgage payment and this is obtained from purchase price of the property less down payment.

 

Once, a down payment and principal amount is determined, it is necessary for one to find out the

 

different types of loan choices that are available for them. These loan choices have varying

 

interest rates and periods of payment with each interest rate increasing as number of years are

 

increased. For this case, the interest rates for 15-year loan is quite low (3.88%) compared to 30year loan (4.75%). This also implies high monthly mortgage payment in contrast with the 20year and 30-year mortgage choices but the total amount interest paid for the 15 year loan period

 

is quite less. Nevertheless, I chose this mortgage loan plan because I want to pay my mortgage

 

faster while I enjoy the comfort of lining in this home.

 

In conclusion, the decision to choose the 15-year mortgage plan over the 20-year mortgage and

 

30-year mortgage plans has impacted greatly on my monthly gross salary as 63.29% of my salary

 

will be used to pay off the loan for the next 15 years. This means that I am only left with 36.1%

 

of my monthly gross salary to spend on other expenses. 5 MAT 110 FINANCIAL LITERACY PROJECT WORKSHEET Fall 2015

 


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