Finding Housing
Due:_________________ Name_____________
You will need to follow two steps to find housing for your family:
1. Determine whether you can afford a mortgage and how much you can afford.
2. Decide whether to rent or buy:
a. If you rent: find a rental house/apartment.
b. If you buy: find a house you can afford and calculate your monthly payment.
Step 1 – Determining What You Can Afford
For this step, you will use an online mortgage affordability calculator. It will tell you the biggest price you should consider paying for a house. You will not be allowed to buy a house larger than this value (because it would represent a very irresponsible financial decision on your part).
TIP: If you have a relatively “low” income, you might think twice about whether or not you want to buy a house. It may be extremely difficult to find any house for sale below your maximum price, and if you do, the house may be in pretty rough shape. HOWEVER, that is a decision that only YOU can make!
Follow the steps below to find your MAXIMUM house value:
a. Go to http://www.homefair.com/tools/mortgage-affordability-calculator/index.asp
b. Enter your gross annual income
c. Enter the amount you expect to make as a car payment in the “monthly debt” field. (You don’t know this number for sure yet – it’s ok to guess!)
d. Enter $10,000 for the down payment.
e. Leave “Property Tax Rate” and “Home Insurance Rate” the same
f. Enter “5” for the “Interest Rate”. Leave everything else the same and click “Submit”
g. You will likely see two different sets of numbers. Look at the bottom set. Look for the “house value” dollar amount. This is the most expensive house you can afford!
h. Print out a copy of this screen and put it in your folder.
MAXIMUM House Value You Can Afford: $_______________________
Step 2 – Find Your Housing!
Ok, now you have to decide if you’re going to rent or buy. Regardless of what you choose, here are some important things to keep in mind while looking for housing:
-- The size of your family
-- The location of the house (how far are you from Orange?)
-- What you want in a house
-- How much money you have to spend per month – this is your NET income!
Are you going to rent or buy? ________________
A. If you are planning on renting, follow these instructions:
-- Look through the newspaper real estate ads and on internet real estate sites. You may use anything that is for rent that has a published monthly payment.
-- You must either print out or cut out the advertisement that clearly shows the monthly price. Put it in your folder, and list the price on the “monthly housing cost” line at the bottom of this worksheet.
B. If you are planning on buying, follow these instruction:
1. Look for a house that you can afford. It must be under the number you found in the affordability calculator!
My House’s Price: $_____________________________
2. Print out/cut out the advertisement for the house. The price must be clearly marked!
3. Follow these steps to find your monthly mortgage payment using the price of the house you have chosen.
a. Go to http://www.mortgagecalculator.org/
b. Enter the price of your house in the “home value” field.
c. Enter $10,000 less than that price in the “loan amount” field.
d. Enter “5” in the Interest Rate field
e. Enter “1” in the property tax field. Leave all the other fields the same.
f. Click on “calculate”
g. On the right side of the screen, there will be list of numbers. Under “Mortgage Repayment Summary” (at the top) find the value they give you for your “monthly payment”. Enter that number on the “monthly housing cost” line below.
h. Print out a copy of this screen and put it in your folder.
Monthly Housing Cost: $_______________________