Buying a home is the biggest single investment or purchase that most individuals

Question

Buying a home is the biggest single investment or purchase that most individuals make. This project is designed to give you some insight into the home-buying process and the associated costs. Find all the costs associated with buying a home by making a 20% down payment and borrowing 80% of the cost of the home.


1. Decide how much your home will cost (and how much you'll have to put down and how much to mortgage). Find a price online(with citation) to determine the cost of a home in your area (this could be a typical starter home, an average home for the area, or your dream house). Identify and estimate all the closing costs associated with buying your home. Closing costs include your down payment, attorney's fees, title fees, and so on.

2. Research 2 banks online (with citation) to determine mortgage loan rates for 15 years, 25 years, and 30 years and the costs associated with obtaining your loan. These associated costs of a loan are paid at closing and include an application fee, an appraisal fee, points, and so on.

- Bank of America: https://www.bankofamerica.com/home-loans/mortgage/overview.go
- Wells Fargo: https://www.wellsfargo.com/mortgage/rates/

3. For each bank and each different loan duration, develop a summary that contains:

(a) an itemization and explanation of all closing costs and the total amount due at closing.

(b) the monthly payment.

(c) the total amount paid over the life of the loan.

Explanation / Answer

I will give the analysis based our of Pittsburgh, Pennsylvania.

Profile

Pittsburgh is known colloquially as ""The City of Bridges"" and ""The Steel City"" for its many bridges and former steel manufacturing base. While the city is historically known for its steel industry, today its economy is largely based on healthcare, education, technology and financial services. The City of Pittsburgh is home to many colleges, universities and research facilities, the most well-known of which are Carnegie Mellon University, Duquesne University and the University of Pittsburgh.

1. Initially do online research of the various prices in the Pittsburgh, PA area. I have researched wbsite like www.zillow.com, www.numbeo.com, www.homes.com

In www.zillow.com, we will get various areas in Pittsburg and its average price of house

The median home value in Pittsburgh is $90,000. Pittsburgh home values have gone up 2.0% over the past year and Zillow predicts they will rise 2.0% within the next year. The median list price per square foot in Pittsburgh is None. The median rent price in Pittsburgh is $1,175, which is higher than the Pittsburgh median of $635.

Neighborhoods in Pittsburgh and average property prices

Name                  Median ZHVI

Southside Flats   $174,900
Central Business District $162,700
Crawford Roberts   $133,900
Southside Slopes   $81,100
Allentown    $74,200
West Oakland    $67,500
Middle Hill    $51,700
Knoxville    $47,800
Arlington    $46,300

Then research at www.numbeo.com for getting the estimated various price index like below:

Index     Info

Consumer Price Index (Excl.Rent): 82.89
Rent Index:     40.61
Groceries Index:    91.61
Restaurants Index:    70.47
Consumer Price Plus Rent Index: 62.28
Local Purchasing Power:   131.53

At bankrate.com we will know the closing cost for a loan amount of $200,000. The breakup is given below:

Pennsylvania closing costs
Loan amount: $200,000

Overview

Average origination fees charged by lenders $1,907
Average third-party fees    $603
Average origination plus third-party fees $2,511

Itemized fee averages

Origination fees charged by the lender

Origination points (not discount points) $888
Application      $343
Document preparation     $60
Broker, originator or lender    $1,064
Processing      $495
Tax service      $72
Underwriting      $200
Wire transfer      $25

Third-party fees

Appraisal      $411
Attorney, closing or settlement   $640
Credit report      $17
Flood certification     $9
Employment verification    $15
Inspections (pest, etc.)    $125
Postage/courier     $55
Survey       $680

The survey excludes title insurance, title search, taxes, property insurance, association fees, interest and other prepaid items.

2. Banks of America Closing cost and other details for each loan duration is given below and assumed to take Fixed rate loan at pin code 15208

3a. Bank of America has given much line level details for closing costs than compared to Wells Fargo.

3b. Please see tables in anser to question 2 bove for monthly payment

3c. Bank of America Total Principal and Interest payment during the loan duration is given below:

15 years = $248,580

20 years = 281,520

30 years = 333.360

Wells Fargo - principal and interest payment for the entire loan period is given below:

15 years = $252,900

30 years = $343,800

In both the website 25 years is not given also the period of loan selection flexibility is not available. Hence best available information is presented here.

Conclusion is go for a Mortgage loan with Bank of America as more disclosure and less interest rate.

Bank of America Pittsburgh (ZIP code 15208) Mortage years 15 20 30 Loan type Fixed rate loan Fixed rate loan Fixed rate loan Closing costs 9402 10131 12,065 Down Payment 50,000 50,000 50,000 Total Cash required 56,689 57,315 59,553 Loan Amount 200,000 200,000 200,000 Interest Rate 3.00% 3.63% 3.75% APR 3.15% 3.78% 3.86% Principal and interest payment 1381 1173 926 Taxes and insurance payment 504 504 498 Mortagege Insurance payment 0 0 0 Total Monthly payment 1885 1677 1424 Total Bank of America fees 1254 1880 1618

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.