Describe your LIFE SCENARIO assignment. In addition to summarizing (or copying/pasting the given scenario), be sure to also explain your impression of the person you’re assigned.

Q1. Describe your LIFE SCENARIO assignment. In addition to summarizing (or copying/pasting the given scenario), be sure to also explain your impression of the person you’re assigned. For example, you might explain:

 

What are things that are important to them? Their values? What are their motivations or aspirations for life? In particular, what is motivating them to buy a home? What does their character seem to like to you? What kind of home do you think they see themselves/family in? 

 

Generating a more in-depth understanding of your life scenario assignment, as a person, will help you to better use logic to help justify your answers in later questions. This is a free-response question so let your mind flow freely 

 

 

 

Q2. What is the price range of the home you will search for?

 

Your down payment may be all or some of your money available, justify why you use the amount you do.

Justify your home price mathematically (some references to consider are the 3.5 times your salary rule (as in your book), the 30% rule, or the Zillow home affordability calculator).

Q3. This question has 2 steps:

 

First: Describe a search criterion for your new home; consider the following carefully and justify with logical reasoning and/or mathematical reasoning:

 

Location (consider schools if you have children, proximity to work, etc.)

Neighborhood amenities (are you in a community with a pool, etc.)

One, two, or three-story

Number of rooms and square footage

Part B: Perform a search with this criterion (on zillow.com, realtor.com, etc.)

 

Can you find what you are looking for in your price range? If not, document this and modify your search.

When you find that perfect house, use its information as your “contract” house.  Include the address in your answer.

Q4. Decide on a loan for this home:

 

Research current rates (this will depend on your credit score and income, do your best to get an accurate rate).

Determine what kind of loan you will get (30 vs. 15 years, fixed vs. variable rate… etc).

Calculate your monthly payment (principal and interest).

Calculate your taxes (on the realtor.com website, usually) and insurance (estimated at 2% of the house purchase price annually).

Q5. Print (“export”/”save as spreadsheet or pdf”) your amortization schedule (various sites provide this online, happy googling) and answer the following:

 

How much interest will you pay over the term of the loan if you only make the minimum monthly payment?

What percent of your payment goes towards the principal in month 1? In month 120?

How long will it take to pay off the loan if you pay 20% more than the monthly payment each month? Is that something you can currently afford?

Q6. Attach your amortization schedule here.

 

Q7. Determine your start-up costs:

 

How much will it cost to move?  Use logic or mathematics in your answer.

Does the house need any repair work?

Q8. Monthly Income:

 

Monthly Income: $

 

Monthly Expenses:

 

Use logic and mathematics to fill in each expense.

 

Note: if the employment in the scenario includes benefits, write ‘N/A’ in those categories

 

Monthly Mortgage Payment (principal, interest, taxes insurance): $

 

Monthly HOA Dues: $

 

Health Insurance: $

 

Retirement: $

 

Total Monthly Debt Payments (car, student loan, etc.) $

 

Power Bill: $

 

Gas Bill: $ (if applicable)

 

Internet Bill: $

 

Grocery: $

 

Cell Phone Bill: $

 

Transportation Total (bus, car, gas, car insurance, etc.): $

 

Healthy and Beauty (haircuts, beauty supplies, medicines, etc.): $

 

Child expenses (if applicable): $

 

Entertainment (streaming services, recreation, gym membership, etc.): $

 

Clothing: $

 

Property Maintenance: $

 

Misc/Other: $

 

Total Monthly Expenses: $

 

Q9. Using your responses to the previous question, calculate your monthly net cash flow. 

 

Monthly net cashflow: $

 

Q10. Summarize your findings by deciding how sustainable your lifestyle is.

 

Are you comfortable and have what you need, or want?

Are you able to save each month, or do you hardly cover your bills?

If you are having a hard time “making it” then decide what it would take for your family to be more comfortable (not including some kind of windfall like the lottery, be realistic).

If you are very comfortable, could you afford a life change, like having a child?

 

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