Loan Project

Loan Project: Buying a House For this assignment, you will analyze a home mortga ge loan. 1. Find a description, asking price, and real estate t axes of a house for sale, and decide on a purchase price you would be willing to pay (assuming you have the means). Find a current market interest rat e for a 30-year fixed-rate mortgage having a down payment of 20 percent of the purchase price.

2. Compute the down payment, amount financed, and the monthly mortgage payment (showing how to use the appropriate financi al formula).

3. Compute the monthly amount of real estate taxes and add to the monthly mortgage payment to get the total monthly amount pa id.

4. Suppose that in order to qualify for the loan, the total monthly amount paid cannot exceed 30 percent of monthly income. What is the minimum monthly income needed to qualify for the loan? What is the minimum annual income needed? (Note: This is a simplified m inimum income requirement calculation, for the purposes of this p roject, as it does not take into account other costs such as insurance or other loans or assets currently held.) 5. Construct an amortization table (using spreadsheet software or online resources such as http://www.bankrate.com ).

6. Assume that the first payment is made in January of the current year. Find the month and year of the last payment. Find the da te of the first month when the amount applied to the principal exceeds th e amount of interest paid. How many of the 360 payments have been made a t this point?

7. Assuming that the mortgage is held for the full 30 years, compute the total principal paid and the total interest paid.

8. Effectively communicate your analysis, interpretati on, evaluation, and the results you found to be particularly interesting, and why. Your report must include name of project and your name house's description, asking price, and real estate taxes, the purchase price, and the current market interest rate (include refer ences) computations and answers for tasks 2, 3, and 4, amo rtization table for task 5, answers for task 6, and computations and answers for task 7 conclusion (task 8)