In this lesson, you will learn how to calculate home loans (mortgages). On a piece of paper, answer the questions below, number them 1-10.
- Know your budget. Banks look for 30% debt to income and a down payment
- Get a general idea on how much houses cost in the area of town you want to live in and figure out how much it will cost per month (A rule of thumb is to us the 10% of price rule)
- Go to www.bankrate.com/mortgages/ to help you fill in the chart below.
1. If your make $4000 per month from work, what is 30% of your monthly income?
2. If your make $2500 per month from work, what is 30% of your monthly income?
3. If your make $8000 per month from work, what is 30% of your monthly income?
|
Loan Amount
|
Loan Term |
Interest rate |
Principal + Interest |
Taxes/12 |
Insurance/12 |
Total monthly Payment |
|
|
4. |
$100,000
|
30 years |
6% |
|
|
|
|
|
5. |
$100,000 |
15 years
|
4.5% |
|
|
|
|
|
6. |
$200,000 |
20 years |
5.5%
|
|
|
|
|
|
7. |
$200,000 |
10 years
|
4% |
|
|
|
|
|
8. |
Current Average House Price |
30 years |
4.5% |
|
|
|
|
9. Use the sales price of the house you chose from the last assignment, calculate the principle, interest, tax, and insurance monthly payment for that house. What is the total monthly payment with a 30 year mortgage, 5.5% interest rate, $1500 for taxes and the actual taxes given on www.SABOR.com
10. Reflection – Finish the following sentence:
Being able to calculate monthly principle and interest, taxes and insurance payments help you ………….