The largest expense and biggest investment for many people is their home. As can be seen from the graphic to the left, the most common mortgage is one that lasts 30 years or 360 payments. Of course, this certainly benefits the bank, but does it benefit you.

The calculation for mortgage payment is more complex than the exercise we are going to do, but we want to examine the impacts of different loan periods.

Lets take a look at what different payment periods will mean for you.

Expected Year of Graduation? ___________

Assume two-years later, you will buy your first home. Year: ________ How old will you be? _______

Estimate your income: What job do you think you will be doing? ________________________

Find your entry level salary online: $ ______________________ http://swz.salary.com/SalaryWizard/LayoutScripts/Swzl_NewSearch.aspx (if undecided major use $ 50,000)

Heres the big assumption, assume your home payment is 30% of your monthly gross income: $ ___________ Annual income 12 x 30%

Lets Compare the Mortgages:

Term	15 years	20 years	30 years
What year do you buy home? (#2 above)
What year will your loan be paid off? (add term)
How old will you be when paid off?
Current Average Interest Rate* *Online Averages on 10/4/16	2.875%	3.322%	3.443%
Monthly Payment (#4 above same for all)
Calculate Home Purchase Price (PV) N = term x 12 I% = Interest Rate/12 PV= answer PMT = Monthly Payment above FV = 0 This is how much home you can afford to buy
Total Loan Cost (term x 12 x monthly payment)
Amount of Interest Paid Total Loan Cost Home Purchase Price
Your Choice: Compare your age at pay-off, the house you can afford and the total interest paid which loan would you choose check one.

Interesting online calculator for mortgages: https://www.chase.com/mortgage/mortgage-resources/affordability-calculator