You will first need to research the housing market and
compare the values of two similar homes in two different areas. The two homes
must be extremely similar in structure size, land size, year built, and
additions such as swimming pools or barns. Then, based upon your findings, you
will select one of the homes to purchase, calculate a monthly payment on the
mortgage note, compare this information with what you can potentially afford,
and address additional questions related to home ownership.
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House
#1
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House
#2
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The goal now is to find a very
similar house (age, lot size, square footage, number of rooms, and number of
bathrooms).
Repeat Steps 1 through 12.
In Step 2, pick another ZIP code
20+ miles away from the first ZIP code you picked for the first house.
In Step 5, pick the same
specification and choose a house that was built in the same year or so as the
first house. Also, try your best to find a house that has the same lot size
and square footage as
the first house.
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Construct a
table showing a comparison of data (including location, square footage, total
price, price per square foot, and specifications), for both houses and then
write a 3–4-page paper detailing the following:
- What is the logic for choosing your two ZIP codes? Is the selection
based upon work location, family location, good schools, and so on?
- What is
the logic behind choosing the size and specifications of each house?
- Compare
the total price of the two homes.
- Compare
the price per square foot for each house.
- Compare
the demographic data (referring to the location and ZIP code) of each
house. Based upon these data, try to explain the similarities and
differences in pricing for each home.
- Select the
home that you will purchase and explain the reasoning behind your
selection. Assume that at least a 20% down payment is required. How much
money would you need to have saved? After the down payment, what would be
the purchase price of the home?
- Assume the
following:
- Closing
costs (including all potential loan origination, title, and closing fees)
are $3,500.
- You have
been approved for a 30-year fixed-rate mortgage note at a rate of 5.0%.
Calculate the monthly payment for this loan. (It is recommended that you
show your calculation.)
- Using your
textbook readings this week as a resource, and based upon your monthly
gross income and current additional debt payments, perform the
calculations below (it is recommended that you show your calculations).
- Your
affordable monthly mortgage payment (assume your lender uses a guideline
of 33% for monthly gross income or 38% if you have other debt payment
obligations)
- Your
affordable mortgage amount (meaning the amount that can be financed;
assume the loan terms under #7b)
- Your
affordable home purchase price (assume a 20% down payment). Compare these
calculations to the previous data under #6 and #7. What are your
conclusions? Discuss your findings, including any surprises!
When purchasing
a home, what additional considerations must you take into account? Discuss the
parties that will be involved, what type of documentation will be required,
home inspection requirements, any additional financing options that you would
evaluate, and so on
Present a
general summary regarding home ownership. What are the advantages and disadvantages
of home ownership, and how does your personal choice fit into your overall
personal financial plan?
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