Buying A House Process Analysis
How to Buy a House
The objective of this project is to clearly explain the process of buying a house. There are many steps that need to be taken in order to be effective in doing this. Buying a house is a major goal for some people, in which they save up money their entire life. The methods used to figure out cost include basic concepts of addition, subtraction, multiplication, and division; however, the formulas needed to calculate it can be a bit tricky. When buying a house, the first thing you need to know is the asking price. Once you know that, you can put a down payment on the home. This is an amount of money, usually paid upfront in the form of cash. To find out how much this is, you will use the lowest interest rate available at the time. Down payments are categorized …show more content…
by a percentage. For instance, say you want to buy a house that costs $478, 900 and you want to pay a 5% down payment. You would multiply the price of the house by the percentage: 478,900 .05 which equals $23,945. So, if you wanted to pay 20% you would multiply the price of the house by .20. The more money you can put towards a down payment, the better. Next, you should check the local mortgage rates for the house you are looking to buy. You will then want to find the best monthly payment with the lowest interest rate, but first you should decide the number of years you are willing to make payments for. The average person will make monthly payments for either 15 or 30 years. In this case, the mortgage rate for a fixed 30-year is 5%, and the rate for a fixed 15 year is 4.25%. This payment also depends on what percentage of a down payment you made in the beginning. The formula you need to consider is:
In this formula, let A= the payment amount per period, P= the initial principle (the loan amount), r= the interest rate per period, and n= the total number of payments or periods. Furthermore, in my example, P= $454, 955, r=.004166667 and n=360. If you plug the numbers into the equation you can find out several monthly payments and determine which one is the best. For instance, (1.) A fixed 30-year mortgage with a 5% down payment would cost you $2,442. (2.) A fixed 30-year mortgage with a 20% down payment would cost you $2,056. (3.) A fixed 15 year mortgage with a 5% down payment would cost $3,422 and (4.) a fixed 15 year mortgage with a 20% down payment would cost $2,882, and so on. To find the amount of money you would pay for the house, depending on the mortgage, you would need to multiply together the amount of the monthly payment by 12, and then multiply that number by the number of years it would take to pay the mortgage. Here are the methods to find each amount: (1.) $2,4421230 = $879,120 (2.) $2,0561230 = $740,160 (3.) $3,4221215 = $615,960 (4.) $2,8821215 = $518,760
After completing these calculations, you will find that option number 4 is the mortgage that will cost you the least amount of money. Now that you have figured out a little bit of what the house is going to cost you, you need to make purchase several items. These items include a bed, a mattress, a washer and dryer, and a refrigerator. These items can be fairly expensive. Here are some numbers to think about:
Bed= $829.99
Mattress Set= 735.00
Washer= $560.99
Dryer= $679.99
Refrigerator= 1,206.99
If you are paying by credit card, you will need to make sure you have the total amount of $4,012.96 in that account.
Assume you put no money down on any of the items, and your credit card has an interest rate of 4.5% for 3 years.
To find the total interest, you will need to use the formula I=prt where p= the principle, r= the rate, and t= the time. If you plugged in 4,012.96 for p, .045 for r, and 3 for t, you will have a total interest of $541.75. Finding the monthly payment is something you should also consider. To do this, take the total interest amount ($541.75) and add to it the total cost of every item ($4,012.96). Divide that number ($4,554.71) by 36. This will give you a monthly payment of $126.52. All together, the total amount you will be paying for the items is $4,554.71. I have included pictures of each item as well as the prospective house you are buying. Along with the pictures are prices of each, which will hopefully help you to envision the process you are about to encounter. Although it may seem difficult and frustrating at times, try to stay focused as you apply the different methods and formulas. It took me several tries on some occasions before I finally got it right. And always remember to double check your work. I have found that buying a house is more expensive than you
think. On a different note, let’s assume I have graduated college and found a job in my desired field. This would mean I accomplished my goal at becoming a Licensed Practical Nurse. The average salary for a LPN is $40,441. As you know, with a paycheck come taxes. If I wanted to find my average starting salary with 20% taxes taken out, I would multiply the salary of $40,441 by .20, which gives me $8,088.20. I would then subtract that number (8,088.20) from 40,441 and would come up with a starting salary of $32,352.80. This number is far less than what I started out with. Now that I know what my starting salary will be, I would like to know how much my monthly income would be after taxes. This will help me balance my finances so I can determine if I will make enough money to pay the bills every month. To do this, I need to divide my starting salary of $32,352.80 by 12 (the number of months in a year). This will give me $2,696.10 a month. Assuming that my mortgage should be 25% of my monthly income after taxes, I financially cannot afford a 15 year fixed rate loan. Also, my house and credit card payments are not reasonable for my income. I may want to consider going back to school to further my education so I can become a Registered Nurse. This would help bring in more income so I can afford the things I want, or I could simply live within my means and settle for something a little less pricey. So, now you see what it takes to buy a house. I have given you a few tools and formulas to help you with this process. You now know how to find things such as a down payment and monthly payments with the lowest interest rate. Always keep in mind interest rates and taxes. These are things that can completely change a price or total cost. I have learned more than I expected to about mortgage rates as I hope you have too.
The objective of this project is to clearly explain the process of buying a house. There are many steps that need to be taken in order to be effective in doing this. Buying a house is a major goal for some people, in which they save up money their entire life. The methods used to figure out cost include basic concepts of addition, subtraction, multiplication, and division; however, the formulas needed to calculate it can be a bit tricky. When buying a house, the first thing you need to know is the asking price. Once you know that, you can put a down payment on the home. This is an amount of money, usually paid upfront in the form of cash. To find out how much this is, you will use the lowest interest rate available at the time. Down payments are categorized …show more content…
by a percentage. For instance, say you want to buy a house that costs $478, 900 and you want to pay a 5% down payment. You would multiply the price of the house by the percentage: 478,900 .05 which equals $23,945. So, if you wanted to pay 20% you would multiply the price of the house by .20. The more money you can put towards a down payment, the better. Next, you should check the local mortgage rates for the house you are looking to buy. You will then want to find the best monthly payment with the lowest interest rate, but first you should decide the number of years you are willing to make payments for. The average person will make monthly payments for either 15 or 30 years. In this case, the mortgage rate for a fixed 30-year is 5%, and the rate for a fixed 15 year is 4.25%. This payment also depends on what percentage of a down payment you made in the beginning. The formula you need to consider is:
In this formula, let A= the payment amount per period, P= the initial principle (the loan amount), r= the interest rate per period, and n= the total number of payments or periods. Furthermore, in my example, P= $454, 955, r=.004166667 and n=360. If you plug the numbers into the equation you can find out several monthly payments and determine which one is the best. For instance, (1.) A fixed 30-year mortgage with a 5% down payment would cost you $2,442. (2.) A fixed 30-year mortgage with a 20% down payment would cost you $2,056. (3.) A fixed 15 year mortgage with a 5% down payment would cost $3,422 and (4.) a fixed 15 year mortgage with a 20% down payment would cost $2,882, and so on. To find the amount of money you would pay for the house, depending on the mortgage, you would need to multiply together the amount of the monthly payment by 12, and then multiply that number by the number of years it would take to pay the mortgage. Here are the methods to find each amount: (1.) $2,4421230 = $879,120 (2.) $2,0561230 = $740,160 (3.) $3,4221215 = $615,960 (4.) $2,8821215 = $518,760
After completing these calculations, you will find that option number 4 is the mortgage that will cost you the least amount of money. Now that you have figured out a little bit of what the house is going to cost you, you need to make purchase several items. These items include a bed, a mattress, a washer and dryer, and a refrigerator. These items can be fairly expensive. Here are some numbers to think about:
Bed= $829.99
Mattress Set= 735.00
Washer= $560.99
Dryer= $679.99
Refrigerator= 1,206.99
If you are paying by credit card, you will need to make sure you have the total amount of $4,012.96 in that account.
Assume you put no money down on any of the items, and your credit card has an interest rate of 4.5% for 3 years.
To find the total interest, you will need to use the formula I=prt where p= the principle, r= the rate, and t= the time. If you plugged in 4,012.96 for p, .045 for r, and 3 for t, you will have a total interest of $541.75. Finding the monthly payment is something you should also consider. To do this, take the total interest amount ($541.75) and add to it the total cost of every item ($4,012.96). Divide that number ($4,554.71) by 36. This will give you a monthly payment of $126.52. All together, the total amount you will be paying for the items is $4,554.71. I have included pictures of each item as well as the prospective house you are buying. Along with the pictures are prices of each, which will hopefully help you to envision the process you are about to encounter. Although it may seem difficult and frustrating at times, try to stay focused as you apply the different methods and formulas. It took me several tries on some occasions before I finally got it right. And always remember to double check your work. I have found that buying a house is more expensive than you
think. On a different note, let’s assume I have graduated college and found a job in my desired field. This would mean I accomplished my goal at becoming a Licensed Practical Nurse. The average salary for a LPN is $40,441. As you know, with a paycheck come taxes. If I wanted to find my average starting salary with 20% taxes taken out, I would multiply the salary of $40,441 by .20, which gives me $8,088.20. I would then subtract that number (8,088.20) from 40,441 and would come up with a starting salary of $32,352.80. This number is far less than what I started out with. Now that I know what my starting salary will be, I would like to know how much my monthly income would be after taxes. This will help me balance my finances so I can determine if I will make enough money to pay the bills every month. To do this, I need to divide my starting salary of $32,352.80 by 12 (the number of months in a year). This will give me $2,696.10 a month. Assuming that my mortgage should be 25% of my monthly income after taxes, I financially cannot afford a 15 year fixed rate loan. Also, my house and credit card payments are not reasonable for my income. I may want to consider going back to school to further my education so I can become a Registered Nurse. This would help bring in more income so I can afford the things I want, or I could simply live within my means and settle for something a little less pricey. So, now you see what it takes to buy a house. I have given you a few tools and formulas to help you with this process. You now know how to find things such as a down payment and monthly payments with the lowest interest rate. Always keep in mind interest rates and taxes. These are things that can completely change a price or total cost. I have learned more than I expected to about mortgage rates as I hope you have too.