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

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

Mortgage Assignment

Question #1• Search the internet for the following key

terms:a) Amortization periodb) Equityc) Interestd) Principale) Unpaid Balance

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?

Mortgage Assingment

Question #3• Find these definitions:

a) Closed mortgageb) Fixed Payment

Types of Mortgages

• Fixed rate mortgages guarantee the monthly payment for the selected term (Ex. 5 years).

Question #4a) What are the advantages of a fixed payment?b) What are some disadvantages?

Types of Mortgages

• Variable-rate mortgages are ones in which the interest rate can fluctuate (change).

Question #5a) What are the advantages of a fluctuating

payment?b) What are some disadvantages?

Types of Mortgages

Question #6Define the following:

a) Open Mortgageb) Variable-rate mortgagec) Fixed-rate mortgage

Amortization Schedule

Question #7Explain the following:

a) Owner’s Equityb) Unpaid Balancec) Interest on Unpaid Balanced) Principale) Owner’s New Equity

Amortization Schedule

All that sounds complicated, but it’s not bad once you break it down.

Let’s look at some examples:

Will Alexandra & Ryan get to live their dream?!

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 #8a) Can they afford it?? b) Explain why or why not?

Use the following link:1) https

://www.rbcroyalbank.com/cgi-bin/mortgage/tools/howmuch/afford.pl

The Ansteys

Question #9• Define the following for the Ansteys:

a) Monthly mortgage paymentb) How much they will pay in interest over the

length of the mortgage.Use the following link:1) https://

www.rbcroyalbank.com/cgi-bin/mortgage/mpc/start.cgi

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 #10a) Can they afford it?? b) Explain why or why not?

The Curtis’ Crib

Question #11• Define the following for the Mr. & Mrs. Curtis:

a) Monthly mortgage paymentb) How much they will pay in interest over the

length of the mortgage.Use the following link:1) https://

www.rbcroyalbank.com/cgi-bin/mortgage/mpc/start.cgi

The Curtis Crib

The Gosney’s Abode

• Riley & Alanna’s eyes meet across a crowded Career class 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 #12a) Can they afford it?? b) Explain why or why not?

The Gosneys

Question #13• Define the following for the Mr. & Mrs.

Gosney:a) Monthly mortgage paymentb) How much they will pay in interest over the

length of the mortgage.Use the following link:1) https://

www.rbcroyalbank.com/cgi-bin/mortgage/mpc/start.cgi

The Gosney’s Abode

Yetman’s Digs

• 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 #14a) Can they afford it?? b) Explain why or why not?

Langdon’s Digs

Question #15• Define the following for the Zach & Shane:

a) Monthly mortgage paymentb) How much they will pay in interest over the

length of the mortgage.Use the following link:1) https://

www.rbcroyalbank.com/cgi-bin/mortgage/mpc/start.cgi

Langman’s Digs

Remember…

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

Because…