Research the housing market and compare the values of two similar homes in two different areas. The two homes must be extremely similar in structure size, land size, year built, and additions such as swimming pools or barns. Then, based upon your findings, you will select one of the homes to purchase, calculate a monthly payment on the mortgage note, compare this information with what you can potentially afford, and address additional questions related to home ownership.
Construct a table showing a comparison of data (including location, square footage, total price, price per square foot, and specifications), for both houses and then write paper detailing the following:
1. What is the logic for choosing your two ZIP codes? Is the selection based upon work location, family location, good schools, and so on?
2. What is the logic behind choosing the size and specifications of each house?
3. Compare the total price of the two homes.
4. Compare the price per square foot for each house.
5. Compare the demographic data (referring to the location and ZIP code) of each house. Based upon these data, try to explain the similarities and differences in pricing for each home.
6. Select the home that you will purchase and explain the reasoning behind your selection. Assume that at least a 20% down payment is required. How much money would you need to have saved? After the down payment, what would be the purchase price of the home?
7. Assume the following:
• Closing costs (including all potential loan origination, title, and closing fees) are $3,500.
• You have been approved for a 30-year fixed-rate mortgage note at a rate of 5.0%. Calculate the monthly payment for this loan. (It is recommended that you show your calculation.)
8. using your textbook readings this week as a resource, and based upon your monthly gross income and current additional debt payments, perform the calculations below (it is recommended that you show your calculations).
• Your affordable monthly mortgage payment (assume your lender uses a guideline of 33% for monthly gross income or 38% if you have other debt payment obligations)
• Your affordable mortgage amount (meaning the amount that can be financed; assume the loan terms under #7b)
• Your affordable home purchase price (assume a 20% down payment). Compare these calculations to the previous data under #6 and #7. What are your conclusions? Discuss your findings, including any surprises!
When purchasing a home, what additional considerations must you take into account? Discuss the parties that will be involved, what type of documentation will be required, home inspection requirements, any additional financing options that you would evaluate, and so on.
Present a general summary regarding home ownership. What are the advantages and disadvantages of home ownership, and how does your personal choice fit into your overall personal financial plan?