2 ITEMS ATTACHED 1. COLLEGE MATH EXCEL ATTACHED 2. No feedback can be provided as the annual gross income is missing so that calculations can be verified - ATTACHED
Theresa Gass-Williams
Bryant & Stratton College
J-MATH201026
College Mathematics
S. Vaitsas
June 8, 2024
Part 3 – Mortgage, Monthly Payments, and AnalysisMortgage, Monthly Payments, and Analysis
Determine Documents for Mortgage Pre-Approval
Before the mortgage is approved, I need to provide proof of income, including the tax returns and the W-2 forms. I also need to provide proof of assets document. They may include the investment states of bank records showing that I have down payment funds and accounts.
Research Houses of Interest
| Address, City, State | List Price | Number of Bedrooms | Number of Bathrooms | Square Footage |
| 35250 Santa Maria St, Yucaipa, CA 92399 | $399,999 | 1134 | ||
| 3111 Silver Springs Dr, La Porte, TX 77571 | $380,000 | 4587 | ||
| 113 Living Waters Boulevard, Lexington, SC 29072 | $330,000 | 2225 | ||
| 2455 NW 22nd St, Cape Coral, FL 33993 | $325,000 | 1321 | ||
| 10 Frances Way SW, Cartersville, GA 30120 | $290,000 | 1711 |
Calculate Monthly Payment
| House Address | Monthly Payment | The loan amount after a $5000 down payment |
| 35250 Santa Maria St, Yucaipa, CA 92399 | $2118.93 | $394,999 |
| 3111 Silver Springs Dr, La Porte, TX 77571 | $2013.37 | $375,000 |
| 113 Living Waters Boulevard, Lexington, SC 29072 | $1743.16 | $325,000 |
| 2455 NW 22nd St, Cape Coral, FL 33993 | $1716.62 | $320,000 |
| 10 Frances Way SW, Cartersville, GA 30120 | $1528.90 | $285,000 |
Calculate Housing Ratio
Calculate the housing ratio for each house. Show the complete breakdown of your work.
Since my monthly income is $5000, below is the calculation. The formula used is the monthly payment/net income *100
| House Address | Housing Ratio (Show all work) |
| 35250 Santa Maria St, Yucaipa, CA 92399 | $2118.93/5000 *100 = 42.38% |
| 3111 Silver Springs Dr, La Porte, TX 77571 | $2013.37/5000 *100 =40.27% |
| 113 Living Waters Boulevard, Lexington, SC 29072 | $1743.16/5000 *100 =34.86% |
| 2455 NW 22nd St, Cape Coral, FL 33993 | $1716.62/5000 *100 =34.33% |
| 10 Frances Way SW, Cartersville, GA 30120 | $1528.90/5000 *100 =30.58% |
In 1-2 sentences, determine which houses are within your budget
Based on the calculations above, these houses are not within my budget since they are higher than 20% of my income. The most affordable one is 10 Frances Way SW, although 30.58% is still high.
Calculate the Total Amount Paid and Interest
Calculate the total amount paid over the 30 years. Show the complete breakdown of your work.
Since none of the houses is within my budget, let me select “10 Frances Way SW, Cartersville, GA 30120.” The total amount paid is monthly amount *12 *30 + $5000 down payment
= 1528.90×12×30 = $ 550, 404
Calculate the total amount of interest paid. Show the complete breakdown of your work.
Total interest is = total amount + principal
= 550,404 – 285000 = $265,404
Calculate Closing Costs
The closing price is 0.05 * list price
=$290,000 *0.05
= $14,500
Financial Analysis
According to the analysis, I am not financially capable of applying for a mortgage today since the monthly payment is 20% higher than my income. There is a need to increase my income and save more money to afford a house. Therefore, in the next two years, I will increase my age and savings to afford a house. To achieve this, I will reduce unessential expenditure to save money and be prepared for a home ownership journey.
References
Liu, L. (2023). Mortgage loan and housing market. International Review of Economics & Finance, 83, 736-749.
