House+Project

In the very near future you will be on your own and faced with the decision as to where to live. You may even decide to buy your own home. Why wait? This project will simulate the costs of buying and owning a home. It has been broken up into several parts and certain parts will be collected and checked along the way as a sort of “rough draft”.

The project will end with your group creating a Google Drawing to share with the rest of the class that will display the house that you bought as well as the costs that you will incur.

Your tasks: First, you may work alone or as a group but no more than 4 people to a group. Your group must tell me how you are dividing up the tasks and you will receive a participation grade as part of your total points.

You will need to choose your house. To do this, there are many real estate websites that will allow you to choose the home that is right for you (according to number of bedrooms, bathrooms, location, etc.). You may choose your home in any part of the United States that you wish. Some national sites are: [|www.zillow.com] [|www.realtor.com] [|www.coldwellbanker.com] [|www.prudentialproperties.com] [|www.remax.com] Some local sites are: [|www.howardhanna.com] [|www.pittsburghmoves.com] [|www.pennsylvaniarealestater.com] Once you choose your home, you will need to work through and submit the home-buying worksheet.

You must tell me what website you used to find your dream home, the address of your home and a short description of your home. Be sure to attach a photo of your home. The house you choose may suddenly be sold and be taken out of the listings. If this happens, you will no longer have access to your home’s information. It is for this reason that part 1 will be due rather quickly.
 * Part 1: Real Estate Agent: Due Friday November 3!**

Then, you must tell me the selling price of your home. (We will assume that you will buy the house for the price that is being asked.)

You will be required to put 20% down on your home purchase. So, the next thing to do is figure out what 20% is and what 80% (The amount that you will mortgage) is of your home cost. This will be a pretty large chunk of change so you and your group should be thinking about how you are going to pay for this down-payment.
 * Part 2: Loan Officer: Due Friday November 10th!**

Your next task will be to figure out the monthly payment on the mortgage of your home. To do this, you will need the current interest rate and the length of the loan, in months. You will need to search [] for the most current interest rate for the area in which you are buying. Please find the best current APR for a 30-year fixed rate mortgage and a 15-year fixed rate mortgage so that we can compare them.

Once you have found the rate, you need to use the formula found on page 112 of your textbook. This formula will calculate your monthly payment. Please be sure to show your work for both the 30-year and 15-year fixed rate. After you have found the monthly payment, you will need to calculate the total amount that you will pay over the life of the loan. Once the total is calculated, you can find the amount of interest that you will have paid the lender by comparing this with the amount borrowed.

Now you and your group must decide which loan you are going to choose, the 30-year or 15-year and you must explain why.

Unfortunately, there are a lot more costs to owning a home than just the mortgage. You will also have to pay homeowner’s insurance premiums, monthly utilities, and real estate taxes. Because homeowner’s insurance rates vary so much between companies, type of house, and type of coverage, I will provide you with a yearly homeowner’s insurance premium. For your monthly utilities, these also vary widely but there is a website you can look at that will tell you the national averages. You must visit the website @http://www.money-zine.com/financial-planning/buying-a-home/owning-a-home/. (Keep in mind that home size, type of appliances, type of utilities, etc. will determine your utility bills in reality.) To use the costs on this website, add up the following monthly costs: **Utilities, Fuels, and Public Services;** **Household Operations; Household Supplies; House Furnishings and Equipment.**
 * Part 3: Tax Collector:** **The research on your real estate taxes is also due on Friday November 10th!**

Now, to figure out your real estate taxes, you must find out how the state that you are buying levies property taxes. To do this, click the link below. Then, click on the map of your state. Then, scroll down to the section marked Property Taxes.

Taxes by state

Once you have found the method that the state uses to apply property tax, I will instruct you on how to proceed in this calculation.


 * Part 4: Relocation Agent:** Now that we know how much our house is going to cost on a monthly basis, you need to figure out what salary you should be earning collectively as a group to be able to afford your home. A general rule of thumb is that your monthly payment should not be more than 28 percent of your gross monthly income (before taxes). This is your housing expense ratio.

This means that a person earning $50000 a year or $4166.67 a month should not spend more than $1166.67 on a monthly payment for their home. (Calculation: 50000/12=4166.67x.28=$1166.67) Since you are starting with your total monthly housing costs, you will need to work backwards to find your salary. (1166.67/.28=4166.67x12 = $50000)

What occupations do you think you and your group should have to make this amount of money?

Do you think this is a realistic home for you to be buying in the future?


 * The entire project worksheet is due Friday November 17th! **


 * Presentation of your house: ** As a final step to your project, you will create a poster about your home and the costs using Google Drawing. Your poster should include:
 * A picture of your house
 * The sale price of your house
 * A brief summary of your home and its features
 * Your 20% down payment amount
 * Your total monthly payment
 * Your group's occupations and yearly salary

<span style="font-family: 'Arial','sans-serif'; font-size: 13px;">Your poster will then be uploaded to the wiki and shared for the other groups to view. To do this, choose "create"-"drawing" from the Google menu. Once you have created your poster, share it with me.