Posted: September 1st, 2022

Making Money from Real Estate Investment

Making Money from Real Estate Investment
In a 750 phrase paper in IWG format, use a web-based mortgage calculator to research and talk about the case examine described under. Your calculations ought to be used to finish the worksheetPreview the doc offered, after which submit the worksheet alongside together with your written solutions to the questions requested within the case examine.

You’re welcome to make use of a web-based mortgage calculator of your selecting, however a few prompt web sites are offered right here:
www.mortgageloan.com
(Hyperlinks to an exterior web site.) and
www.bankrate.com
(Hyperlinks to an exterior web site.). Please you’ll want to choose the “calculator” or “mortgage calculator” hyperlink. To make use of a mortgage calculator you shouldn’t be required to enter any of your private info.

1.
Choice 1
Mortgage Fee per Month (M) = P[r(1+r) ^n/((1+r) ^n)-1)]
250,000[4%/ 12 (1+4%/12) ^ (30*12) / ((1+4%/12) ^ (30*12)-1)] =
250000(zero.04 ÷ 12(1 + zero.04 ÷ 12) (12 × 30) = 2761.2153
((1 + (zero.04 ÷ 12) (12 × 30) – 1)) = 2.31345838

2761.2153/ 2.31345838= $1193.54
Mortgage PYT = $1193.54
Property Taxes= (1.25%/12(1193.54) = $1.24
Insurance coverage= =$60
PMI= zero% =$zero
TOTAL = $1254.78
Choice 2
250,000[3%/ 12 ( 1+3%/12)^(15*12) / ((1+3%/12)^(15*12)-1)]=
250000(zero.03 ÷ 12(1 + zero.03 ÷ 12) (12 × 15) = 979.644827917

((1 + (zero.03 ÷ 12) (12 × 15) – 1)) = zero.567431724668

979.64/ zero.567431724668 = $1726.45
Mortgage PYT = $1726.45
Property Taxes= (1.25%/12(1726.45) = $1.798
Insurance coverage= =$60
PMI= zero% =$zero
TOTAL = $1788.25

2. The second choice can be probably the most appropriate mortgage for John and Jane. That is based mostly on the whole quantity to be paid on the finish of the 15 years, contemplating the rates of interest, insurance coverage, and property taxes that may also have an effect on the fee charges. When contemplating the 30-year mortgage, John and Jane’s dwelling consumers will find yourself paying a complete of $451,440.00. This can be a significantly massive quantity they may find yourself paying in 30 years. This determine is arrived at by calculating the month-to-month mortgage fee by the point every fee might be made (month-to-month for the remainder of the 30 years).
That’s 1254.78*12*30 = $451,440. The opposite choice will see Jane and John use a mixed complete of $321,840.00. This determine was arrived at based mostly on the identical calculations 1788.25*12*15 = $321,840.
The homebuyers make 63,000 a yr and already pay a complete of 500 a month in scholar loans, automotive loans, and bank card debt. In a yr, they may have $21,456 deducted off their earnings for 15 years. Quite the opposite, they may pay a complete of $15,zero57.36 for double the interval paying an extra $129,600 extra.

three. Paying property taxes is a requirement for a lot of householders and property homeowners alike. The FHA moreover requires the householders to pay property taxes and their mortgage fee to guard the lender if the homebuyer is pressured into foreclosures attributable to unsure circumstances. Perez (2018) identifies that that is necessary in that it protects the lender from having to foot the invoice for the remaining property tax as soon as the home-owner defaults. It’s thought of a requirement to pay property taxes month-to-month as a part of your mortgage fee, or else the lender should foreclose in your property. This primarily protects the lender. Perez (2018) identifies that the property tax is collected and put in an escrow account the place it accumulates and is paid by the lender to the county on the finish of the yr.
four. For the primary choice, John and Jane, the homebuyers, should pay a complete of $170,977.88 in curiosity if the mortgage is paid to maturity. Quite the opposite, in the event that they take the second really useful choice, John and Jane, the homebuyers should pay a complete of $57,729.84 in curiosity if the mortgage is paid to maturity. This additional proves the declare that Choice 2 is best than Choice 1.
5. To economize on mortgage curiosity, John and Jane, the homebuyers, might select to make bi-weekly funds. This provides as much as 13 funds a yr as an alternative of 12 funds a yr. American Financing (2020) identifies that the extra one fee might be transformed to the principal quantity, and the extra the principal paid, the extra fairness a person will get on the home. Jane and John might additionally make an additional mortgage fee yearly. The homebuyers might get monetary savings each month and add it to the month-to-month fee to the tune of 1 extra month in fee on the finish of the yr. It will permit them to pay their loans off sooner. American Financing (2020) identifies that by doing this, they could find yourself paying their mortgage in 27 years two months in stead of 30 years in the event that they selected choice 1. Lastly, Jane and John, the householders, might resolve to recast / or carry out a re-amortization. That is paying off half extra cash and speaking to your lender to redraw the phrases of the mortgage in order that it isn’t thought of a brand new mortgage quite the identical mortgage solely that they’ve lowered the principal quantity provided within the first place. It’s paying a lump sum quantity and asking the lender to redraw the month-to-month mortgage fee to scale back the quantity being paid each month.

References
American Financing. (2020). 5 methods to avoid wasting hundreds in mortgage curiosity. Retrieved from https://www.americanfinancing.internet/saving-money/save-more-in-mortgage-interest
Perez. (2018). Are property taxes included in mortgage funds? Retrieved from https://smartasset.com/mortgage/property-taxes-included-in-mortgage-payments

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