You hope to be able to purchase a home within 1-3 years after graduation. You expect to have to save for the necessary down payment and closing costs without relying on financial help from your family or relatives. Your financial goal is to purchase a home in the $300,000 price range and have the available cash for the down payment and required closing costs for the type of mortgage financing that you select and are able to receive home mortgage loan approval.

Based upon what you should have learned this semester in this class, what type of home mortgage financing do you believe is going to be the right one for your first home purchase? Briefly explain why.

ASSUME THAT THE REAL ESTATE HOME MORTGAGE FINANCING CONDITIONS ARE APPROXIMATELY THE SAME AS TODAY1

Type of home mortgage Financing? ____________

Required Down Payment? $ ____________

Expected Closing Costs? $ _____________

Total amount of your expected required Down payment and closing costs?

$_______________

Amount of your new mortgage loan? $_____________ Do not add your closing costs to your mortgage loan amount. Closing costs are paid at the closing!

Do you want a 15 year of a 30 year term mortgage? ___________

Expected annual interest rate for your home mortgage? ____________%

What is your monthly mortgage payment based upon your information above?

$_____________

What is your payment plus 1/12 annual property taxes $_______ and insurance $ ______

Estimate the insurance and property taxes based upon the geographic area where you plan to live. BE SPECIFIC and REALIST

Total Monthly Mortgage Payment including Taxes and Insurance = $______________

How much annual income must you earn in order to qualify for the type of home financing that you have selected?

Annual Income Needed $________________

Monthly Income Needed $ _______________

What is the Annual Percentage Rate for your home mortgage loan __________%

Your Home as an Investment

How much total cash outflow will you need to purchase your home $ ______________

If the home that you purchase appreciates in value by 4% per year, what will be the current market value of your home in 7 years?

$ ________________

What will be your outstanding mortgage loan balance after 7 years?

$ _________________

What will be you total home equity value in your home after 7 years?

$_____________

What will be your annual rate of return on your investment in homeownership at the end of 7

years? _____________%