My dream house
This project will require you to find your dream house, calculate the down payment, loan amount, and closing costs for a mortgage. You will use the loan payment formula to determine your monthly payments for a 30-year fixed loan and for a 15-years fix loan along with determining the total interest paid over the period of the loan. You will create a 12 months amortization chart for both periods. You will make a decision on which loan you would take and provide reasons for your choice based on comparing the monthly payment amounts and the total interest paid amounts.
For finding the title fee please go to First American Title into the Title Fee Calculator and insert your property information to find the title fee.
Please use the following specifications for some prtions of the closing costs on the dream home project...
5% title insurance,
Wire Transfer fee 1% of down payment,
Origination Fee is .25% of loan amount
1. Listing of the house. Open a new browser and go to www.ziprealty.com. This website will allow you to search for available properties for free in your desire neighborhood. Once you find the property you will need to print it out. The most important is the first page with all the information about the property and the one that contain the property taxes information.
2. Interest rates. For this project you will need to calculate the mortgage payments for a 30 years fix rate of 3.75% and for a 15 years fixed rate of 2.97%.
3. Down Payment. The minimum down payment for a conventional loan is 5%. Using this information, calculate the down payment and the value of the loan for the property you selected.
Value of the house = Down payment + Value of the loan.
4. Closing costs. The following item form the closing cost for a loan:
• Origination, broker, lender or originator: Not applicable
A fee charged to create a home loan. It's often a set percentage of the mortgage amount.
• Discount points
A fee in the form of mortgage interest paid up front. In exchange for this fee, the lender reduces the interest rate. One point is equal to 1 percent of the loan amount. For this project you need to calculate 1 point at the closing: _______________________
• Appraisal : $400
A fee that is passed on to a company that renders an opinion about the real value of the home, independent of its listing or negotiated price. That value is then compared against what the borrower has agreed to pay.
• Credit report: $25
A fee charged to order a history of your financial life. It includes details about your behavior as a bill payer, the amount of debt you owe, your available credit and any inquiries that companies make to obtain this information, such as your mortgage lender. A good credit report means better loan terms.
• Tax service: $75
A fee to cover the cost of hiring a company to verify the amount of real estate taxes due and making sure they're paid.
• Flood certification: $200
A fee that covers the assessment of whether a property is in a flood zone. If it is, the new homeowner must buy a flood insurance policy.
• Title services: $900
Charges for administrative costs (such as title search) associated with the delivery of title insurance, as well as the services provided by a title or escrow agent.
• Title insurance: ___________________
The title insurance is a policy that guarantees that an owner has the title to a property and can legally transfer it to someone else. Should a problem arise, the title insurer pays any legal damages. A policy may protect the mortgage lender, the homebuyer or both. For this project you will need to find a quote for property insurance. To find a quote of the insurance you can open a google website and write down the property address, insurance quote.
• Attorney, closing or settlement: $400
The amount paid to an attorney for witnessing the mortgage loan transaction.
• Document preparation: $375
A fee a lender charges to a borrower for producing the documents signed at the closing table.
• Inspections (pest, etc.): $400
A fee paid to a certified person who searches the dwelling for termites and other destructive creatures.
• Postal/courier: $75
This fee covers what it costs a lender to send paperwork to the other entities involved in the mortgage transaction.
• Survey: $200
A fee charged to hire a licensed surveyor to get an accurate measurement of the property and its boundaries.
• Wire transfer fee: Down Payment value: _______________
The amount charged to transfer funds needed to close on a home loan. The wire transfer is the value of the down payment.
5. Mortgage calculations. Show your monthly payments’ calculations for both loan: 30 years and 15 years.
6. Amortization Chart. For both loan calculate the amortization chart for the first 12 months.
7. Escrow loan. Your monthly payments from item 5 do not include property taxes nor
insurance. You need to prorate the property taxes and insurance fees monthly and calculate a monthly payment with escrow.
8. Conclusion. Compare the monthly payments for both types of loans and compare the total interest paid over the loan period for a 30 years loan and for 15 years loan. Select the best type of loan and justify your selection and provide reasons of your choice.