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Mortgages

Mortgages. Put a roof over your head, without it later caving in on you. Calculating Mortgage Payments. A house is typically the largest purchase you will ever make, so it makes sense to make an informed purchase . Mortgage Assignment.

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Mortgages

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  1. Mortgages Put a roof over your head, without it later caving in on you.

  2. Calculating Mortgage Payments A house is typically the largest purchase you will ever make, so it makes sense to make an informed purchase.

  3. Mortgage Assignment Using this Power Point as a guide, create a Word document that answers the questions contained in this Power Point. Save it in your “H” drive, as Mortgage Assignment

  4. Mortgage Assignment Question #1 • Search the internet for the following key terms: • Amortization period • Equity • Interest • Principal • Unpaid Balance

  5. Down payments • First-time buyers can often secure financing with only 5% of the purchase price as a down payment. Question #2 Are there any problems with this?? How could it be a negative thing for someone to be able to purchase a house with only 5% down?

  6. Mortgage Assingment Question #3 • Find these definitions: • Closed mortgage • Fixed Payment

  7. Types of Mortgages • Fixed rate mortgages guarantee the monthly payment for the selected term (Ex. 5 years). Question #4 • What are the advantages of a fixed payment? • What are some disadvantages?

  8. Types of Mortgages • Variable-rate mortgages are ones in which the interest rate can fluctuate (change). Question #5 • What are the advantages of a fluctuating payment? • What are some disadvantages?

  9. Types of Mortgages Question #6 Define the following: • Open Mortgage • Variable-rate mortgage • Fixed-rate mortgage

  10. Amortization Schedule Question #7 Explain the following: • Owner’s Equity • Unpaid Balance • Interest on Unpaid Balance • Principal • Owner’s New Equity

  11. Amortization Schedule All that sounds complicated, but it’s not bad once you break it down. Let’s look at some examples:

  12. Will Alexandra & Ryanget to live their dream?!

  13. Mr. & Mrs. Anstey • This couple worked insanely hard to save up $30,000 for a down payment on their home. • Ryan & Alex earn a gross family income of $65,000. • Their dream home is $350,000. • The bank offers them a rate of 3.50% over 25 years. Question #8 • Can they afford it?? • Explain why or why not? Use the following link: • https://www.rbcroyalbank.com/cgi-bin/mortgage/tools/howmuch/afford.pl

  14. The Ansteys Question #9 • Define the following for the Ansteys: • Monthly mortgage payment • How much they will pay in interest over the length of the mortgage. Use the following link: • https://www.rbcroyalbank.com/cgi-bin/mortgage/mpc/start.cgi

  15. The Curtis’ Crib • Stephanie and Lucas are struck by Cupid’s arrow and decide to tie the knot. They have their sights set on a condo in Corner Brook. • They save $10,000 for their down payment, and earn a combined $75,000/year. • The condo they have chosen is $250,000. • They are discussing an interest rate of 4.55% over 25 years. Question #10 • Can they afford it?? • Explain why or why not?

  16. The Curtis’ Crib Question #11 • Define the following for the Mr. & Mrs. Curtis: • Monthly mortgage payment • How much they will pay in interest over the length of the mortgage. Use the following link: • https://www.rbcroyalbank.com/cgi-bin/mortgage/mpc/start.cgi

  17. The Curtis Crib

  18. The Gosney’sAbode • Riley & Alanna’seyes meet across a crowded Careerclass and they decide to get hitched. • They bring in about $71,000/year. • They choose to live at home until they can save up $5000 for the down payment on a fixer-upper that costs $110, 000. • The bank will look at a loan with an interest rate of 9.25% over 25 years. Question #12 • Can they afford it?? • Explain why or why not?

  19. The Gosneys Question #13 • Define the following for the Mr. & Mrs. Gosney: • Monthly mortgage payment • How much they will pay in interest over the length of the mortgage. Use the following link: • https://www.rbcroyalbank.com/cgi-bin/mortgage/mpc/start.cgi

  20. The Gosney’sAbode

  21. Yetman’sDigs • Shane and Zach finally stop denying it (That sharing a house makes financial sense, of course), and move in together. They want to purchase a big house with a big garage for all their machines and gear. • The cost is $565,000. They just inherited $40,000 that they will use as a downpayment. • They make a combined $82,000/year. The bank will secure a loan for 25 years, @2.99%. Question #14 • Can they afford it?? • Explain why or why not?

  22. Langdon’s Digs Question #15 • Define the following for the Zach & Shane: • Monthly mortgage payment • How much they will pay in interest over the length of the mortgage. Use the following link: • https://www.rbcroyalbank.com/cgi-bin/mortgage/mpc/start.cgi

  23. Langman’sDigs

  24. Remember… • You don’t want to get in over your head and be forced to do this

  25. Because…

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