Entrance Ticket What are 4 things that you should do or ask when you go on an apartment visit?

Agenda 1) Intro to Mortgages 2) House Hunting! 3) Exit Ticket 4) HW: College Debt and Home Ownership

2 factors to consider when considering cost of home: How much do you need to borrow? Down payment is how much $$ you pay up front Larger down payment = smaller loan you have to take out Smaller down payment: Cost of home = $150,000 Down payment = 10% = (150,000)(.10) Down payment = $15,000 Amount have to borrow = 150,000 – 15,000 = $135,000 Larger down payment: Cost of home = $150,000 Down payment = 25% = (150,000)(.25) Down payment = $37,500 Amount have to borrow = 150,000 – 37,500 = $112,500

2 factors to consider when considering cost of home: What type of mortgage do you need to take out? Mortgage: loan you take out to pay for home APR ARM = adjustable rate mortgage FRM = fixed rate mortgage Length of repayment time varies (you choose): 30-year, 15-year, 10-year mortgages

Which mortgage will have higher monthly payment? Monthly Payments Which mortgage will have higher monthly payment? 30-year mortgage 15-year mortgage Cost of home = $150,000 # of months in 30 years = (30)(12) = 360 months Monthly payment = 150,000/360 = $416.67 Cost of home = $150,000 # of months in 15 years = (15)(12) = 180 months Monthly payment = 150,000/180 = $833.33

Amount of Compounded Interest Which mortgage will be cheaper overall? 30-year mortgage 15-year mortgage Cost of home = $150,000 Fixed APR = 7% Formula: CI = P [(1 + r) ^t – 1] CI = B = Cost of home = $150,000 Fixed APR = 7% Formula: CI = P [(1 + r) ^t -1 ] CI = B =

Can you afford a home? www.realtor.com Locate 1 home in CF + 1 home in Pawtucket Calculate monthly mortgage payments www.bankrate.com -> Mortgage calculators Complete sheet

Exit Ticket What are some key calculations you have to make when agreeing to a mortgage?