Name ______
Chapter 10 Home Buying Project
Mortgage Loans
Go to . Using the glossary on this page, write the definitions of 3 words dealing with mortgages that we may not have directly talked about in class. Let the 3 words you choose be words you are interested in learning their definition or more information than what was talked about in class.
Word 1: ______-
Word 2: ______-
Word 3: ______-
On this same page, click the tab “FHA Loan Requirements”. Then click on the link “Your Loan Checklist”. Write down the items that the article suggests having with you when you report to the bank/financial institution for a mortgage loan.
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
k.
Click the back arrow. Now click on the link “FHA Credit Issues”. Explain how this institution will deal with approval or denial of a loan for the different situations below.
a. No credit history-
b. Chapter 13 bankruptcy-
c. Chapter 7 bankruptcy-
d. Late payments-
e. Foreclosure-
f. Collections, Judgements, Federal Debts-
The following worksheet process can help you estimate the maximum amount of a mortgage loan most financial institutions will approve you for. Use the following person as an example: $45,000 annual gross income, with an average of $100 previous debts per month, $400 per month for taxes, insurance, and utilities, 20% down payment
1. Annual household gross income
2. Monthly Gross Income
3. Percent of income to be spent on long term debt (suggestion is 35%)
4. Multiply line 2 by line 3
5. Estimated Monthly Debt repayment (including other loans, credit card debt, etc)
6. Estimated monthly expenses for property taxes, insurance, and utilities
7. Add lines 5 and 6 together
8. Affordable monthly mortgage payment- subtract line 7 from line 4
9. Divide line 7 by 8.41
10. Multiply line 9 by 1000
11. Percent of Amount Financed in Decimal
12. Loan Approval Amount- divide line 10 by line 11
Refinancing
On the same website as used above, click on the “Refinancing Loans” tab. Write and explain the 2 types of refinancing options that this institution offers.
Option 1: ______-
Option 2: ______-
Closing Costs and Real Estate Tax
You are interested in buying a home, but want to choose one you are sure you can make the mortgage payments and monthly expenses for. Suppose your family’s yearly gross income totals $60,000.
a. How much gross income does your family make monthly?
b. Using the FHA’s suggestion of 35% of your income, up to how much money can you afford for a home each month?
c. Suppose you plan to have half of the money used from part b to go toward the housing expenses, bills, insurance, taxes, etc. and the other half to go toward the mortgage payment. How much money are you allotting toward a mortgage payment each month?
Visit You are going to be looking for a home on this website in the Transfer/Greenville area that meets your mortgage loan requirements in part c above. Choose a home that meets this condition, and then answer the following questions about it.
a. Address of house: ______
b. Price house is listed for: ______
c. Mortgage loan payments suggestion listed: ______
d. Number of bedrooms/bathrooms: ______
e. Square footage of the home: ______
f. 5 features of the home that were appealing to you: ______
______
______
Answer the following questions about the home you researched above.
a. Suppose you buy the home for the listed price and make a 20% down payment. How much is your mortgage loan for?
b. Suppose you are getting a 25 year mortgage at an interest rate of 6% for the home. How much will you pay in monthly payments for the home?
c. Can you afford this based on the suggested maximum mortgage amount that you found above? If not, what are some factors that you can change to try and get the mortgage loan payments as a doable option?
Visit . Choose a home that is listed between $50,000 and $150,000. Write down the following information about the house.
a. Price house is listed for: ______
b.5 key facts about the house: ______
______
______
c. Suppose the house is assessed at 35% of its listed value. What is the real estate tax for the home each year?
d. What is the real estate tax if you choose to break it up into monthly payments?
e. The closing costs for the home involve a $400 survey fee, 2% of listed price for real estate agent fees, and a $45 recording fee. What are the total closing costs?
Homeowner’s Insurance
In class we learned that flood insurance is not covered under a standard homeowner’s insurance policy. Go to the following link and answer the following questions about adding a flood insurance policy to your coverage. You may also need to use the brochure link to find answers as well.
a. Why should you consider adding flood insurance to your policy?
b. Where can you go to buy flood insurance?
c. What does the article say is the average cost for flood insurance in low-risk areas?
d.What does the article say is the average cost for flood insurance in high-risk areas?
Using Google as a sample search engine, name 5 insurance companies that offer homeowner’s insurance coverage in western Pennsylvania.
a.
b.
c.
d.
e.
Other Costs- Utilities
Utilities vary between homes. Use the calculator at to determine how much money some household appliances cost per month in electric.
Item / Watts / Hours Per Day / Cents Per KWH / Cost Per Day / Cost Per MonthMicrowave Oven / 800 / 2 / 12
Laptop Computer / 50 / 3 / 12
TV / 70 / 3 / 12
Refrigerator / 200 / 24 / 12
Clothes Dryer / 3000 / 1 / 12
Item of Your Choosing #1:
Name: / 12
Item of Your Choosing #2:
Name: / 12
Use Google as a sample search engine,name 5 factors that may cause 2 houses in the same area to have drastically different utility bills.
a.b.
c.d.
e.
Go to to compare the cost of living between two cities. Compare the cost of living, employment, and housing for each of the two areas.
a. Choose Greenville, PA and Hermitage, PA.
GreenvilleHermitage
Cost of Living- Housing / # / #Cost of Living- Utilities / # / #
Employment / Letter: / Letter:
Housing / Letter: / Letter:
b. Choose Greenville, PA and Pittsburgh, PA.
GreenvillePittsburgh
Cost of Living- Housing / # / #Cost of Living- Utilities / # / #
Employment / Letter: / Letter:
Housing / Letter: / Letter:
Wrap-Up Questions
What factors should you look at when considering what house to purchase? List at least 5.
Explain how each of these factors determines your overall mortgage expense:
down payment for the loan:
term of the loan-
interest rate for the loan-
What are some other factors that you need to pay monthly, besides the mortgage payments? List at least 3.
Throughout this chapter and during this activity, what are 3 things you learned about purchasing a home?