Project guidelines
Bennie Waller
wallerbd@longwood.edu
434-395-2046
Longwood University
201 High Street
Farmville, VA 23901
Bennie D Waller, Longwood University
Project Guidelines
 Your project/paper will entail you selecting a career in which you
are interested in pursuing
 Researching that career in terms of
 educational requirements,
 expected demand for such careers now and in the future,
 expected income,
 You should provide a full discussion of why you feel that your
skills and personality would lend themselves to allowing you to
be successful in such a career.
Bennie D Waller, Longwood University
Project Guidelines
 In your discussion of your chosen career, please include the type
of lifestyle such a career will likely provide.
 For example, using knowledge that you gained from this course,
how much of a home would you be able to afford with this
career? (This is covered in Module 8 on Home/Auto).
 You will be provided some reasonable assumptions in terms of
automobile, credit cards and student loan payments, and will be
required to calculate a maximum mortgage amount using the
28/36% lending guidelines.
 Be sure to factor in your discussion whether you will have the
required 20% down payment or will have to pay PMI?
Bennie D Waller, Longwood University
Project Guidelines
 SOURCES OF INFORMATION
 Bureau of labor statistics www.bls.gov
 For example, the link below provides career
information on real estate brokers and agents such
income, educational requirements and employment
outlook.
 http://www.bls.gov/ooh/sales/real-estate-brokers-andsales-agents.htm
Bennie D Waller, Longwood University
Project Guidelines
Does this career intersect with “what you love”, “what you’re
good at” and “what pays well”? If not, what concession are
you willing to make in this career selection?
Bennie D Waller, Longwood University
How much can you afford?
Assume that you can obtain a $200,000, 30 year loan at an
annual rate of 6% to purchase a home. What would your
monthly payment?
PMT= $1,199.10
PV = -200,000
FV = 0
N = 30x12=360
I = 6/12 = .50
Monthly Payment = 1199.0
Total Payments = $431,676.38
Interest Payments = 231,676.38
Bennie D Waller, Longwood University
Housing costs
 If purchasing a home, you are likely to incur significant onetime costs such as
 Down payment
 Loan points
 Application/credit/origination fee
 Application fee
 Appraisal, title, attorney, home inspection fee
 Title insurance
 Recurring costs
 PITI
 Maintenance
 Repairs
Bennie D Waller, Longwood University
Borrowing ratio example
Maximum loan amount
6% FRM with monthly amortization, 30 years
28% ratio
36% ratio
36,000
3,000
Annual Income
Monthly Income
36,000
3,000
Annual Income
Monthly Income
840
100
PITI (28%)
Monthly taxes
1,080
250
PITI and other debts (36%)
Monthly car payment
100
640
Monthly insurance
Income for PI
100
100
630
100
100
430
Monthly credit card payment
Monthly student loan payment
Income for PITI
Monthly taxes
Monthly insurance
Gross income for PI
$106,746.63 Maximum amount of loan
$71,720.39 Maximum amount of loan
Bennie D Waller, Longwood University
Down payment is a prohibitive factor
Maximum home value
Based on 80% LTV mortgage lending guidelines
28% ratio
36% ratio
$106,746.63
$71,720.39
80% LTV
$133,433.29
$89,650.49
20% PMT
$26,686.66
$17,930.10
 Without 20% down payment you will need to pay private
mortgage insurance
Bennie D Waller, Longwood University
Terms of mortgage
 Factors to consider
 Interest rate
 Size of monthly payment
 Term of mortgage
Loan Amount
Interest
Years
100,000
6.00%
30
100,000
6.00%
15
Monthly Payments
Total Payments
599.55
215,838.19
843.86
303,788.46
Interest
115,838.19
203,788.46
Bennie D Waller, Longwood University
Assumption to use in your project
Income
Under $30,000
Monthly
Student Loans
Monthly
Car Loan
Monthly
Credit Cards
0
$300
$100
>$30,000 <$50,000
$150
$300
$150
>$50,000 <$80,000
$200
$400
$200
>$80,000 <$100,000
$300
$500
$250
Over $100,000
$500
$600
$350
Addition assumptions
• Monthly property taxes - $100
• Monthly hazard insurance premium - $100
• If you cannot come up with the 20% down payment, add an additional
1% of original loan amount divided by 12 to your monthly PITI
payment. For example, a 100,000 loan requiring PMI would pay an
additional $83.33 per month (100,000 * (.01/12))
Bennie D Waller, Longwood University
Format of your project
Format of project
• Typed in Word (no hand written work accepted)
• Times roman size 12 font
• Double-spaced
• All references or works cited should be reported
• Project is due July 9th by 11:00PM
• Project should be submitted via an email attachment and emailed to
wallerbd@longwood.edu
Bennie D Waller, Longwood University
Thank You
Bennie D Waller, Longwood University