Compare the following: a. Loan amount of; $800,000 @ 2.90% - 30 year mortgage (total interest and principal paid over the 30 year mortgage) VS. Loan amount of; $400,000 @ ?????% 30 year mortgage (total interest and principal paid over the 30 year mortgage) b. Please calculate the taxes paid on the home over the 30 year mortgage. Please use a standard 1% yearly property tax assessment over the 30 year mortgage. Remember, we are assuming the taxable valuation of both scenarios will stay consistent. ie: taxation at; $800,000 & $400,000 respectively ( this is not the case for actual application and, we will discuss Prop 13 later in the semester which, is tied to CA. property taxes) C. Please layout in detail the overall cost for each scenario: Total principal and interest (Pl) paid over 30 years, along with total taxes paid over the 30 span as well. Please use the sum of; $0 for the down payment - in real life application, many mortgages typically have 10-20% down payment requirements and, typically, more for investment properties. However, for sake of ease and simplicity, we are going to assume zero down. Additionally, in real life application(s), you would need a homeowner's insurance policy, this is billed yearly by the insurance carrier. This is similar to car insurance in that, if you have financing on a home, ie; a loan, you will need to carry insurance. That being said, we are going to leave that cost out of your calculation for now. d. Please share with me in a paragraph or two, which scenario you would prefer and, why? Remember, the interest rate for the $400,000 calculation will be discovered by you, via the uploaded link/doc. on historic interest rates. Find the average rate over the last 50 years, you may round-up if you would like, then back-out 3% from that number and, utilize that interest rate for the calculation on the; $400,000 scenario. You are welcome to run the interest rate by me so, you can be assured of the accuracy on your calculation(s). Compare the following: a. Loan amount of; $800,000 @ 2.90% - 30 year mortgage (total interest and principal paid over the 30 year mortgage) VS. Loan amount of; $400,000 @ ?????% 30 year mortgage (total interest and principal paid over the 30 year mortgage) b. Please calculate the taxes paid on the home over the 30 year mortgage. Please use a standard 1% yearly property tax assessment over the 30 year mortgage. Remember, we are assuming the taxable valuation of both scenarios will stay consistent. ie: taxation at; $800,000 & $400,000 respectively ( this is not the case for actual application and, we will discuss Prop 13 later in the semester which, is tied to CA. property taxes) C. Please layout in detail the overall cost for each scenario: Total principal and interest (Pl) paid over 30 years, along with total taxes paid over the 30 span as well. Please use the sum of; $0 for the down payment - in real life application, many mortgages typically have 10-20% down payment requirements and, typically, more for investment properties. However, for sake of ease and simplicity, we are going to assume zero down. Additionally, in real life application(s), you would need a homeowner's insurance policy, this is billed yearly by the insurance carrier. This is similar to car insurance in that, if you have financing on a home, ie; a loan, you will need to carry insurance. That being said, we are going to leave that cost out of your calculation for now. d. Please share with me in a paragraph or two, which scenario you would prefer and, why? Remember, the interest rate for the $400,000 calculation will be discovered by you, via the uploaded link/doc. on historic interest rates. Find the average rate over the last 50 years, you may round-up if you would like, then back-out 3% from that number and, utilize that interest rate for the calculation on the; $400,000 scenario. You are welcome to run the interest rate by me so, you can be assured of the accuracy on your calculation(s)
