Project
When you write you should include vocabulary and understanding of how each of these mini
projects actually fit into the project. The paper should flow and have transition statements
between paragraphs.
The following is a possible outline for Finance Project. The paper does not have to be in this order but make sure you include why each part is being calculated. The paper is not just a bunch of miniproject. It is putting the mini projects into a meaningful purpose paragraphs. You get points for showing understanding of what you are doing and why. Include vocabulary and statements of why these are needed to see if you will be approved for the loan.
Cover sheet
v Intro include thesis statement
v Intro yourself career, starting salary and 5th year salary
v House
§ Describe the house
§ Price of the house
§ Loan
v House Payment
§ What three items are in the house payment and why does the bank collect all 3
§ Mortgage
¨ Bank
¨ Mortgage interest rate (fix or adjustable)
¨ Monthly payment
§ Homeowner Insurance
¨ Insurance company
¨ Annual and monthly payments
§ Property Tax
¨ Explain where you got this information (and or property tax rate)
¨ Annual and monthly payments
§ Total
v Money needed at closing
§ Explain closing cost
¨ These are from the bank that gave the mortgage rate
¨ Fixed cost
¨ Origination, and/or Discount fees
1 point is equal to 1% of the loan
¨ Total closing cost
§ Total money at closing is
¨ Total closing cost + down payment =MC
§ Sinking fund
¨ Explain
¨ Bank where the saving’s interest rate came from
¨ Savings interest rate
¨ Beginning (annuity due) or end (ordinary annuity) of the month
¨ Calculate the minimum deposit for 5 years to achieve this value
v Budget will starting salary support this minimum payment
§ Starting salary
§ Taxes
¨ Federal annual
¨ State annual
¨ Social Security annual
¨ Medicare annual
¨ Total annual Taxes
¨ Monthly annual taxes
§ Monthly Budget
§ Total money one can save a month
¨ Annual Gross – monthly taxes – monthly budget = money saved
§ Money saved every month grows to ….
¨ Using either the beginning or end of the month (same as above)
v Will the loan be approved?
§ The guidelines for approval (section 6.4)
§ You must state all three guidelines and show the results clearly
House price
House expense
Enough saved
§ If yes to all 3 then the loan is approved
§ If no for 2 or 3, do another calculation to see if the loan will be approved. If still can’t pass give some other options. (see problem in section 6.4 for some ideas)
§ If you are not approved because of #2 then if you used 15 years try 30 years
§ If you are not saving enough either save for more years, or find the difference and how much additional you need – calculate the lump sum to grow to this value, or how much does one need to be making a year in order to get this approved
v _ Conclusion
v _ Conclusion of the paper
Additional items
Cost of the loan?
How much interest paid on the loan?
How much is the investment into the savings account? How much interest is earned?
House payment is what percent of the monthly 5th year gross
Monthly savings is how much of monthly 1st year gross
Table or pie chart for your budget