Assignment: The Mortgage Worksheet Project

This project is based on the material learned in Section 10.5, Buying a House with a Mortgage. For a sample, please view the mini-mortgage worksheet that is included at the end of the Section 10.5 Class Notes.

Please find two links for the Mortgage Project below. The first link is a Word Document of the Mortgage Worksheet project. The second link is a pdf file of the same document (just in case you do not have Microsoft WORD on your computer). Pdf files can be viewed and printed using Adobe Reader, which is free software and easy to install if necessary.

Please read through these additional Mortgage Project instructions that are on top of the worksheet as well as the additional instructions here:

- Print legibly and always use complete sentences with correct grammar and punctuation.

- Show all of your work. This means listing formulas that you used and showing how you used the formulas to arrive at your answer.

- For #5 and #8 on the worksheet, you must also print off a copy of the on-line sources and send them to me along with your completed worksheet. The print off is required as sometimes the source URL becomes outdated (or the information changes) by the time I am able to look it up for grading.

- The goal is to buy a house that you can afford. If it turns out that you cannot afford the house that you selected, try again. It also should be a house that you could live in comfortably. (Would you actually buy and live in a run-down $15,000 house?)

- The house price should come from a real house that is for sale. You can often look online for homes that are for sale through realtor websites (vincennesrealty.com, etc.).

- The interest rate that you find needs to be a real interest rate offered by a bank. These can change daily, so be sure to print out your source! Find current mortgage rates from the website of a bank (etfcu.org, etc.)

Mortgage Worksheet

You work a job with an annual salary of $60,000. You want to buy a house with a down payment of 20%. Go online to find a property that you can afford and interest rates for mortgages. When you show work, write down the formula used then plug in numbers. Write legibly, use complete sentences, and use correct spellings and punctuation. For online sources, give the full URL and print off a copy of the page sourced. Round to the nearest cent.

1. Find how much you make per month. Show work.

2. Find out how much you can afford per month for a mortgage. Show work.

3. Why is the answer to question 2 reasonable? Explain.

4. Interest rate and how many years the mortgage is for:

5. Online source for 4:

6. House price:

7. Yearly property taxes on house:

8. Online source for 6 and 7:

9. Find the monthly property taxes on house. Show work.

10. Assume an insurance rate of 1% of the house price per year. Find the yearly insurance. Show work:

11. Find the monthly insurance on the house. Show work:

12. Down payment on house. Show work:

13. List 3 assumptions that you make about this purchase. After each, explain why the assumption is important.

14. Amount of house price (#6) that will be mortgaged. Show work:

15. Monthly mortgage payment. Show work:

16. Find the PITI (monthly payments, including mortgage, taxes, and insurance). Show work:

17. Find the total amount paid over the life of the mortgage, using the principal and interest only. Include the down payment. Show work:

18. Find the total interest on mortgage. Show work:

19. Is the PITI reasonable and sustainable, given your salary? Consider taxes and insurance. Explain: