timer Asked: May 1st, 2013

Question Description

I’m trying to study for my Programming course and I need some help to understand this question.

Directions for Submitting Your Instructor Graded Assignment

You need to use Microsoft Word for this assignment. Save your file in a location that you will remember. When you are ready to submit it, go to the Dropbox. You will be able to come back to the Dropbox and view your graded work or in the Gradebook after your instructor evaluates it.

Get started on the assignment by watching the Should I Buy a House? video on the link below then answer the following questions.

Joe has decided that he is tired of paying rent and not building equity of his own. He thinks that he is ready to assume the responsibility of owning a home and has found what he believes is the perfect first home. Joe meets with the loan officer at his bank where the process of buying a home is started. The loan officer provides Joe with a great deal of information, leaving him excited and apprehensive at the same time.

What you know:

The purchase price of the house is $75,000.

Joe has $10,000 in savings.

Joe makes $15 per hour and works 40 hours per week.

30-year mortgage interest rate of 6.25% and a monthly payment of $439.00

15-year mortgage interest rate of 5.25% and a monthly payment of $575.00

Down payment: 5% minimum

Taxes last year were $375.

Insurance is $250 per year.

What you are looking for:

  1. Can Joe afford the monthly payments with taxes and insurance for either a 30 or 15 year mortgage?
  2. If Joe buys the house, will he have enough money left over on a monthly basis to live comfortably?
  3. Does Joe have enough in savings to pay for the down payment and all of the closing costs?

Solution Plan:

Complete the following questions based upon the information in the video and other information provided in the worksheet.

  1. Joe figures that with overtime he will average 40 hours a week for 52 weeks a year. If his current wage is $15.00 per hour, how much will he make per year?
  2. How much would Joe’s wages be in an average month?
  3. Based upon the information in the video, Joe has a car payment of $249 per month. The average utilities are: Electricity, $79; Gas, $49; Water, Sewer, and Trash, $27. In addition, Joe is saving $100 per month. How much of his monthly salary would be committed to utilities and other expenses?
  4. If Joe’s net income after taxes each month is equal to 74% of his gross wages, how much is his net income?
  5. Joe’s total monthly payment to the bank will consist of the mortgage interest plus principal amount plus monthly payments for insurance and taxes. What will the total monthly payments be for a 15-year and a 30-year loan including taxes and insurance?
  6. After paying for his car, utilities, and a 15-year mortgage payment how much will he have left to cover other living expenses? If he goes with a 30-year mortgage, how much will he have left over to cover living expenses?
  7. Make a list of your living expenses and try to estimate monthly expenses. Does Joe have enough left over to live comfortably if he buys the house? Should he go with the 15 or the 30-year mortgage?
  8. Complete the Good Faith Estimate to see if Joe has enough money in savings for the down payment and closing costs:
Description of FeeAmount of FeeExtended Amount
Down Payment5% of purchase price
Loan Origination FeeNo fee at this bank
PointsNo points on this loan
Appraisal Fee$400
Credit Report$50
Insurance—First Year Premium$250
Mortgage insurance$45 (one month)
Escrow Account Insurance reserveInsurance for two months ($250 / 12) * 2
Escrow Account Tax reserveProperty Taxes for two months($375 / 12) * 2
Attorney feesBuyer’s choice. None here.
Title Insurance$700
Document Preparation and Recording Fees$250
Tax Service$50
Flood Certification$20
Title Co. Fee$150
Pre-paid InterestDepends on closing date: Estimate $150.00
Total Due at Closing:

Student has agreed that all tutoring, explanations, and answers provided by the tutor will be used to help in the learning process and in accordance with Studypool's honor code & terms of service.

This question has not been answered.

Create a free account to get help with this and any other question!

Brown University

1271 Tutors

California Institute of Technology

2131 Tutors

Carnegie Mellon University

982 Tutors

Columbia University

1256 Tutors

Dartmouth University

2113 Tutors

Emory University

2279 Tutors

Harvard University

599 Tutors

Massachusetts Institute of Technology

2319 Tutors

New York University

1645 Tutors

Notre Dam University

1911 Tutors

Oklahoma University

2122 Tutors

Pennsylvania State University

932 Tutors

Princeton University

1211 Tutors

Stanford University

983 Tutors

University of California

1282 Tutors

Oxford University

123 Tutors

Yale University

2325 Tutors