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```					                              ERIE COMMUNITY COLLEGE
TITLE III GRANT

Interdisciplinary Course Materials

COURSE:                              MT 001/MT 006

COURSE OUTLINE TOPICS:
 Perform basic computations with rational numbers.
 Apply the rules for rounding.
 Use set formulas.
 Present organized written work.
 Read critically and think logically when solving application problems.

PROJECT TITLE:                       Purchasing and Financing a Home.

PROJECT DESCRIPTION:
In this project, the student will analyze the cost of purchasing a home in the WNY area. The
student will:
1) Determine the type of home that they would like to purchase. For example, 2 story or
ranch (1 story), how many bedrooms and bathrooms, location of the home, etc.
2) Review newspaper advertisements or use the internet to select a home that ‘fits their
needs’ and is in their price range. The selected home and all of the home details must be
submitted.
3) Financing: the student will determine the principal amount that will be financed based on
assuming 20% down and closing costs of 3 points (or 3%). The closing costs account for
the credit reports, recording costs, document preparation, flood certification, pest and
other inspections, mortgage broker fee, lawyer’s fees, points, and title search. The
closing costs are based on the mortgage amount and are allowed to be financed into the
price of the home after the down payment.
4) The student will calculate the monthly payments based upon two scenarios: 30 year fixed
rate mortgage and 20 year fixed rate mortgage. They will then calculate the total amount
financed (principal plus interest) based upon each scenario.
5) The student must find their property of interest in the public records that are on-line and
determine the taxes on this property. This will need to be printed and presented within
this project.
6) Once the student determines their monthly payments, they will calculate their monthly
taxes that will be added to their monthly payments to determine the full month’s
mortgage payment (principal, interest and taxes). Each component will be entered in a
table format, their principal, interest, and monthly property taxes for the total monthly
cost.
AUTHOR:                         Deborah Doucette, Mathematics

Purchase a Home Project                    ICM Project                                     Page 1
SEMESTER CREATED:              Fall, 2009

A. ESSENTIAL QUESTION:

Most people want to purchase a home some time in their life. This project is based on the
student choosing a home to satisfy their current needs or their ‘dream home’. The student will
then analyze the costs associated with the purchase of a home as well as the mortgage payments
associated with home ownership.

B. INTRODUCTION:

In order to begin this project, the student needs to seriously consider what type of home they
would like to purchase. This home purchase could be based upon any time frame. For example,
they could choose to purchase a home that satisfies their needs now or they can choose their
‘dream home’ that is something that they can’t afford now but perhaps sometime in the future.
To help the student, they are asked to fill in the following table that helps their selection criteria.
They should have fun with the project and seriously think about their needs. They should not
randomly pick a house, but should select one in an area where they would like to live.

First, the student will have to research the homes available now in the area based upon their
selection criteria. To find their home, they can use the internet or newspaper advertisements.
They should make sure the home they’ve selected shows the address and township. Upon final

To help with the mortgage calculations, mortgage information is listed in a table below. It is
current based upon 2009 data.

C. THINGS TO LEARN BEFORE STARTING THE PROJECT:

Before starting this project, the student must be able to do basic arithmetic, multiply using
percents, and use tables. The student will also need access to newspapers and the internet.

Purchase a Home Project                      ICM Project                                         Page 2
D. BASIC DIRECTIONS:

Before you even begin looking at homes, you need to determine the following:

How many
bathrooms do
Where do you want to                    you want (i.e. 1,
live, (i.e. Amherst,   How many 1 ½, 2, etc). A ½              How many floors do you
Williamsville,      bedrooms        bathroom is one        want, for example do you
Cheektowaga,      (i.e. 2, 3, or 4 that doesn’t have      want a ranch (1 floor) or a 2
Depew, Buffalo,      bedrooms)         a shower or          story home? If you’re not
etc.)?       do you want:          bathtub)          sure, then leave this blank.

E. PROJECT ASSIGNMENT:

 Select your home based upon the selection requirements above:
 Look through the Saturday home advertisements or go on-line and choose a home in the
location desired above. Make sure the home that you’re interested in has the price listed
information to a sheet and attach it to this assignment.

 The mortgage company that will finance your purchase is currently offering rates of
5.75% for a 30 year fixed and 5.50% for a 20 year fixed rate mortgage. This is offered
with 20% down and closing costs that are based on 3% of the purchase price. Closing
costs are allowed to be financed.
 The following table can be used to determine the monthly payment (obtained from
Western NY Area Mortgage Rates Center dated 11/24/09 found in the Saturday, “Home
Finder” insert in the Buffalo News):

30 year - 360 payments @ 5.75%                    20 year - 240 payments @ 5.50%
\$5.84/\$1,000 borrowed                             \$6.88/\$1,000 borrowed

   Go on the internet and find the township/city in which your home is listed. Generally
you’ll find the taxes listed in the Assessment listing. This may take a little time to find.
Find the most recent taxes assessed (school and town/city) on this home and print out the

Purchase a Home Project                    ICM Project                                        Page 3
page for reference. Either staple or glue this information to the sheet and attach it to this
assignment.

Now you’re ready to determine the cost of ownership on this home!
Fill in the following table with all of the details that you have obtained. Don’t forget to use the
dollar (\$) sign when indicating monetary values:

Use this column to
Use this column to      show the value of
74,000 + \$565 =         your calculator
Purchase Price:
Down Payment: (20% of                                                             DP
the Purchase Price).
Round to the nearest
hundredth.
Closing Costs (3% of
the mortgage the
amount). Round to the
nearest hundredth.

Purchase Price
Amount to be financed:           (from above):
Down Payment
(from above, DP):

Net purchase price
(subtract the down
payment from the
purchase price):

Copy from above the
closing costs:

TF
Total Amount to be
financed including
net purchase price and
the closing costs):

Purchase a Home Project                     ICM Project                                        Page 4
Calculate your monthly     amount to be financed
principal and interest      from the box above
payment:               and divide this by
1000.
Take A5 and multiply         F30
it to the 30 year rate
(\$5.84/\$1,000
borrowed). Round to
the nearest hundredth.
Take A5 and multiply         F20
it to the 20 year rate
(\$6.88/\$1000
borrowed). Round to
the nearest hundredth.
P&I
Take F30 and multiply
Calculate the TOTAL                                    30
it by 360 (a 30 year
Principal and Interest                                 yr
loan which means you
financed over the course
make 360 monthly
of the loan.
payments)
P&I
Take F20 and multiply
20
it by 240 (a 20 year
yr
loan which means you
make 240 monthly
payments)
Write down the total
school taxes in the
costs of home
ownership:
right.
Write down the total
town/city taxes in the
right:
T1

listed above together:

Divide the total taxes      T12
(T1) by 12 month/year
for the monthly tax
costs:

Purchase a Home Project                   ICM Project         Page 5
mortgage costs for a
30 year fixed
mortgage from F30
with the monthly tax
assessment from T12:
mortgage costs for a
20 year fixed
mortgage from F20
with the monthly tax
assessment from T12:

Now, let’s highlight the important pieces of information for you to determine the cost of
home ownership.

1. Write down on this line the purchase price of your home:

\$_______________________

2. Write down the required amount of your down payment (DP): \$____________________

3. Write down the required amount of your closing costs:      \$____________________

4. The total amount financed for a 30 year fixed loan is (P&I 30 year):

\$_______________________

5. The total amount financed for a 20 year fixed loan is (P&I 20 year):

\$_______________________

6. Your annual taxes on this property are (T1):

\$ ______________________

7. Your monthly mortgage payment (including taxes) for the 30 year loan is (TM30):

\$_______________________

8. Your monthly mortgage payment (including taxes for the 20 year loan is (TM20):

\$_______________________

Purchase a Home Project                   ICM Project                                   Page 6
9. Is this home affordable?

10. Which length of term (30 year or 20 year) would you use? Why?

11. What’s the difference between the two lengths of term of financing? (show your work)

F. STUDENT RESOURCES:

Students will need a calculator and access to a newspaper and the internet.

G. FACULTY RESOURCES:

Faculty will need to have covered basic arithmetic and percentages. If mortgage values change
much from the printing of this project, the mortgage rates will need to be updated. They were
taken from the Buffalo News Homefinder section in the Saturday paper.

Each entry is worth 1 point. The free answers are worth 2 points.

Purchase a Home Project                    ICM Project                                  Page 7

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