MM255 Business Math Unit 8 Instructor Graded Project Directi

MM255 Business Mathunit 8 Instructor Graded Projectdirections For Subm

Complete the following assignment by analyzing Joe’s potential home purchase, including his income, expenses, and affordability. Show all work clearly. Use a Microsoft Word document for submission to the designated Dropbox by Tuesday at 11:59 PM ET. Questions should be directed to the instructor via email or office hours. After grading, students can review their work in the Gradebook or Dropbox.

Begin by watching the "Should I Buy a House?" video, then answer the following questions based on the scenario and provided data.

Paper For Above instruction

Joe has decided he wants to buy a home instead of renting. He has found a house priced at $75,000 and has $10,000 in savings. He earns $15 per hour, working 40 hours weekly. His loan options include a 30-year mortgage at 6.25% interest with a $439 monthly payment (excluding taxes and insurance), and a 15-year mortgage at 5.25% interest with a $575 monthly payment. The minimum down payment is 5%, taxes paid last year were $375, and yearly insurance costs $250.

The assignment requires analyzing Joe’s ability to afford the mortgage payments including taxes and insurance, whether he can live comfortably on his remaining income, and if his savings cover the down payment and closing costs. Specific calculations include annual and monthly wages, expenses, net income, total monthly payments, leftover funds for living expenses, and a review of the loan and closing costs.

First, calculate Joe’s annual gross income based on his hourly wage and hours worked. Monthly wages follow from this annual figure. Next, combine existing expenses like car payments, utilities, savings, and estimate the total committed income. Determine Joe’s net income after taxes, assuming it’s 74% of gross wages.

Assess the total monthly payments for both the 15-year and 30-year mortgages, including property taxes and insurance. After paying these, compute how much money remains for other living expenses, considering current expenses like car payments and utilities. Prepare an estimated list of all monthly living costs to evaluate whether Joe can comfortably afford the house payments. Decide whether a 15-year or 30-year mortgage better suits his financial situation.

Using the provided Good Faith Estimate details, verify if Joe’s $10,000 in savings is sufficient for the down payment (5%) and closing costs, including fees such as appraisal, credit report, escrow, title insurance, and other charges. Summarize findings about affordability, savings adequacy, and the best mortgage term to meet Joe’s financial capacity and living standards.

References

  • Brigham, E., & Houston, J. (2019). Fundamentals of Financial Management (14th ed.). Cengage Learning.
  • Geltner, D., Miller, N., Clayton, J., & Eichholtz, P. (2014). Commercial Real Estate Analysis and Investments (3rd ed.). OnCourse Learning.
  • Hilber, C. A. L., & Vermeulen, W. (2016). The Impact of Supply Constraints on Housing Prices in England. Regional Science and Urban Economics, 60, 134-151.
  • Keown, A. J., Martin, J. D., & Petty, J. W. (2017). Financial Management: Principles and Applications (13th ed.). Pearson.
  • McKinsey & Company. (2020). The Future of Residential Real Estate. McKinsey Insights.
  • Nguyen, T. P., & Lemoine, G. (2019). Affordability and Housing Market Dynamics. Journal of Housing Economics, 45, 101-110.
  • Rosen, K., & Keno, D. (2018). Personal Finance Essentials: Managing Your Money Wisely. Pearson.
  • Real Estate Finance and Investments. (2018). Third Edition. William B. Brueggeman & Jeffrey D. Fisher. McGraw-Hill Education.
  • Wooldridge, J. M. (2016). Introductory Econometrics: A Modern Approach (6th ed.). Cengage Learning.
  • Yunus, M., & Moingeon, B. (2017). Social Business Models and the Power of Business to Solve Social Problems. Journal of Business Ethics, 149(2), 377–391.

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