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					Renting v. Owning                                              Name _________________________

                                                               Period _____ Date _______________




3-bedroom apartment - 1066 square feet                   4-bedroom house -- 1530 square feet
apartment complex with pool                              Ray & McQueen in Chandler
Chandler & Dobson in Chandler                            Jan, 1998 – price $ 119,000
                              Rent for the Year          mortgage loan                           $ 119,000
Jan, 1998 – rent: $750/mo. __________                         10% down payment                    - 12,000
Jan, 1999 – rent: $750/mo. __________                         amt to be loaned           $ _________
Jan, 2000 – rent: $750/mo. __________                    30-year loan, 7% interest rate
Jan, 2001 – rent: $800/mo. __________
                                                         monthly payments =            $ 711.87
Jan, 2002 – rent: $800/mo. __________                     some of this payment pays down the
Jan, 2003 – rent: $850/mo. __________                      principal of the loan
                                                          most of this payment goes toward
Jan, 2004 – rent: $850/mo. __________                      interest on the loan
Jan, 2005 – rent: $850/mo. __________
                                                         after 10 years in Jan 2008
Jan, 2006 – rent: $900/mo. __________
Jan, 2007 – rent: $900/mo. __________                    original cost of home --         $ 119,000.00
                                                         you’ll have paid ......
A. If you rented ....                                            down payment                - 12,000.00
1. How much have you paid in rent                                principal payments          -    15,180.75
for 10 years? _______________                            you’ll owe on the mortgage          $ _________
2. What do you have after paying 10 years
of rent in an apartment? ________________                in Jan 2008 the home is worth $ 237,000.00
                                                         you still owe on the mortgage           - 91,819.25
                                                         equity you have in the home: $_________




adapted from Learning, Earning & Investing, Lesson 12, NCEE                         Page 1
B. If you bought a home ....


3. How much have you paid in mortgage payments for 10 years?
   __________/month x _____ months/year x ______ years = $ _______________


4. Although after 10 years you’ve only paid down $______________ off of the original
mortgage of $107,000.00, you have $ _______________ equity in the house because
_____________________________________________________________________


5. When you buy a home and make a mortgage payment rather than a rent payment,
you are __________________ in an asset that you will later be to ...
       (a) _______________ and earn money from that the sale of that asset
  or
       (b) keep and live in for “free” when you ______________ – except for property
taxes & upkeep costs.




adapted from Learning, Earning & Investing, Lesson 12, NCEE              Page 2
       Renting v. Owning                                             TEACHER




3-bedroom apartment - 1066 square feet                   4-bedroom house -- 1530 square feet
apartment complex with pool                              Ray & McQueen in Chandler
Chandler & Dobson in Chandler                            Jan, 1998 – price $ 119,000
                              Rent for the Year          mortgage loan                      $ 119,000
Jan, 1998 – rent: $750/mo. _$9000_                            10% down payment               - 12,000
Jan, 1999 – rent: $750/mo. _$9000_                            amt to be loaned              $ 107,000
Jan, 2000 – rent: $750/mo. _$9000_
Jan, 2001 – rent: $800/mo. _$9600_                       30-year loan, 7% interest rate
Jan, 2002 – rent: $800/mo. _$9600_                       monthly payments =            $ 711.87
Jan, 2003 – rent: $850/mo. _$10,200_                      some of this payment pays down the
                                                           principal of the loan
Jan, 2004 – rent: $850/mo. _$10,200_                      most of this payment goes toward
Jan, 2005 – rent: $850/mo. _$10,200_                       interest on the loan
Jan, 2006 – rent: $900/mo. _$10,800_                     after 10 years in Jan 2008
Jan, 2007 – rent: $900/mo. _$10,800_
                                                         original cost of home --         $ 119,000.00
                                                         you’ll have paid ......
A. If you rented ....                                           down payment                - 12,000.00
                                                                principal payments         - 15,180.75
1. How much have you paid in rent                        you’ll owe on the mortgage        $ 91,819.25
for 10 years? __$98,400___
                                                         in Jan 2008 the home is worth $ 237,000.00
2. What do you have after paying 10 years                you still owe on the mortgage - 91,819.25
of rent in an apartment? ___nothing_____                 equity you have in the home: $ 145,180.75




adapted from Learning, Earning & Investing, Lesson 12, NCEE                       Page 3
                                                              TEACHER



B. If you bought a home ....
3. How much have you paid in mortgage
payments for 10 years? __$ 711.87 x (10 x 12) = $8,5424.40____


4. Although after 10 years you’ve only paid down $_ 15,180.75____ off of the original
mortgage of $107,000.00, you have $ 145,180.75 equity in the house because
___the home has risen in value____________________
6. When you buy a home and make a mortgage payment rather than a rent payment,
you are investing in an asset that you will later be to ...
       (a) sell and earn money from that the sale of that asset
  or
       (b) keep and live in for “free” when you retire – except for property taxes &
upkeep costs.




adapted from Learning, Earning & Investing, Lesson 12, NCEE                  Page 4
Los Arboles Apartments
1586 W. Maggio Way
Chandler, Arizona 85224
$900 / month Oct 2008


home 944 E. Baylor Lane
Chandler Arizona 85225




adapted from Learning, Earning & Investing, Lesson 12, NCEE   Page 5
Results of Your Mortgage Calculation


For the values you entered:
      Principal= $107000
      Interest Rate= 7.00%
      Amortization Period= 30 years
      Starting month= Jan
      Starting year= 1998
      Monthly Pre-payment= $0
      Annual Pre-payment= $ 0.00



Your monthly payment will be $ 711.87
The following mortgage would result for 1998 :
      Jan: Principal: $ 87.71 Interest: $ 624.17 Balance: $ 106912.29
      Feb: Principal: $ 88.22 Interest: $ 623.66 Balance: $ 106824.07
      Mar: Principal: $ 88.73 Interest: $ 623.14 Balance: $ 106735.34
      Apr: Principal: $ 89.25 Interest: $ 622.62 Balance: $ 106646.09
      May: Principal: $ 89.77 Interest: $ 622.10 Balance: $ 106556.32
      Jun: Principal: $ 90.30 Interest: $ 621.58 Balance: $ 106466.02
      Jul: Principal: $ 90.82 Interest: $ 621.05 Balance: $ 106375.20
      Aug: Principal: $ 91.35 Interest: $ 620.52 Balance: $ 106283.85
      Sep: Principal: $ 91.88 Interest: $ 619.99 Balance: $ 106191.97
      Oct: Principal: $ 92.42 Interest: $ 619.45 Balance: $ 106099.55
      Nov: Principal: $ 92.96 Interest: $ 618.91 Balance: $ 106006.59
      Dec: Principal: $ 93.50 Interest: $ 618.37 Balance: $ 105913.08



       And for the rest of the term:


      FOR 1998: Interest= $ 7455.57      Principal= $ 1086.92   Balance= $ 105913.08
      FOR 1999: Interest= $ 7376.99      Principal= $ 1165.49   Balance= $ 104747.59
      FOR 2000: Interest= $ 7292.74      Principal= $ 1249.74   Balance= $ 103497.85
      FOR 2001: Interest= $ 7202.40      Principal= $ 1340.09   Balance= $ 102157.76
      FOR 2002: Interest= $ 7105.52      Principal= $ 1436.96   Balance= $ 100720.80
      FOR 2003: Interest= $ 7001.64      Principal= $ 1540.84   Balance= $ 99179.96
      FOR 2004: Interest= $ 6890.26      Principal= $ 1652.23   Balance= $ 97527.73
      FOR 2005: Interest= $ 6770.82      Principal= $ 1771.67   Balance= $ 95756.07
      FOR 2006: Interest= $ 6642.74      Principal= $ 1899.74   Balance= $ 93856.32
      FOR 2007: Interest= $ 6505.41      Principal= $ 2037.07   Balance= $ 91819.25

adapted from Learning, Earning & Investing, Lesson 12, NCEE                     Page 6
      FOR 2008: Interest= $ 6358.15 Principal= $ 2184.33 Balance= $ 89634.92
      FOR 2009: Interest= $ 6200.24 Principal= $ 2342.24 Balance= $ 87292.68
      FOR 2010: Interest= $ 6030.92 Principal= $ 2511.56 Balance= $ 84781.12
      FOR 2011: Interest= $ 5849.36 Principal= $ 2693.12 Balance= $ 82087.99
      FOR 2012: Interest= $ 5654.68 Principal= $ 2887.81 Balance= $ 79200.19
      FOR 2013: Interest= $ 5445.92 Principal= $ 3096.57 Balance= $ 76103.62
      FOR 2014: Interest= $ 5222.07 Principal= $ 3320.42 Balance= $ 72783.20
      FOR 2015: Interest= $ 4982.03 Principal= $ 3560.45 Balance= $ 69222.75
      FOR 2016: Interest= $ 4724.65 Principal= $ 3817.84 Balance= $ 65404.91
      FOR 2017: Interest= $ 4448.66 Principal= $ 4093.83 Balance= $ 61311.08
      FOR 2018: Interest= $ 4152.71 Principal= $ 4389.77 Balance= $ 56921.31
      FOR 2019: Interest= $ 3835.38 Principal= $ 4707.11 Balance= $ 52214.20
      FOR 2020: Interest= $ 3495.10 Principal= $ 5047.39 Balance= $ 47166.82
      FOR 2021: Interest= $ 3130.22 Principal= $ 5412.26 Balance= $ 41754.55
      FOR 2022: Interest= $ 2738.97 Principal= $ 5803.52 Balance= $ 35951.04
      FOR 2023: Interest= $ 2319.43 Principal= $ 6223.05 Balance= $ 29727.99
      FOR 2024: Interest= $ 1869.57 Principal= $ 6672.92 Balance= $ 23055.07
      FOR 2025: Interest= $ 1387.18 Principal= $ 7155.30 Balance= $ 15899.77
      FOR 2026: Interest= $ 869.92 Principal= $ 7672.56 Balance= $ 8227.21
      FOR 2027: Interest= $ 315.27 Principal= $ 8227.21 Balance= $ 0.00



Where the final summary is

      Monthly Payment: $ 711.87
      Total Interest:$ 149274.52(No pre-payment)
      Total Interest:$ 149274.52 (As given)
      SAVINGS: $ -0.00 Total Interest Saved, 0.00 Years shorter loan
      1998 Interest $ 7455.57
      1999 Interest $ 7376.99
      Ending Balance Dec 1999: $ 104747.59
      Average Interest Each Month: $ 414.65

mortgage calculator & amortization table from
http://www.hsh.com/calc-amort.html




adapted from Learning, Earning & Investing, Lesson 12, NCEE              Page 7

				
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