Buying a vehicle and a house

  1. What is the item to be researched (vehicle, motorcycle, camper, or boat)?
  2. Step 1 – the first step in planned buying is to prioritize wants
  3. Develop a list of features you desire from your purchase (a priority worksheet developed for an auto purchase)
    b. Prioritize the listed features by assigning a score of 1, 2, or 3 (with 1 = must-have
    features and 3 = nice-to-have features)-

Note: You must have at least 6 features.

1.  Feature #1 – what is it?—->
Priority (1-3)              —–>

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  1. Feature #2 – what is it?—–>
    Priority (1-3)              —–>
  2. Feature #3 – what is it?—–>
    Priority (1-3)              —–>
  3. Feature #4 – what is it?—–>
    Priority (1-3)              —–>
  4. Feature #5 – what is it?—–>
    Priority (1-3)              —–>
  5. Feature #6 – what is it?—–>
    Priority (1-3)              —–>
  6. More features? – List what are they with their priorities
  7. Step 2 in the planned buying process is preshopping research
  8. Locate and present information on at least two, separate alternative purchases of the item you might consider. You can get this information from Craigslist, or a dealership web site.
    Information may be a product review, detailed product descriptions, or other
    information helpful in evaluating the alternatives under consideration.
    b. Locate and present price information for each of your alternatives.
    c. Locate and present financing information for each of your alternatives. This
              information could include such factors as trade-in information, APR interest rates
              (U.S. lenders only), financing terms, other financing costs such as insurance,  
              warranty insurance, etc. as necessary to calculate the monthly payment
              and allow for an informed comparison of the alternatives.

Link – this link will give you a  monthly payment amount.  It does not include the cost of monthly insurance.  (Links to an external site.)

 

Alternative #1- what is it?
a. Information
b. Pricing $
c. Cost of financing and estimated monthly payment $

  1. Alternative #2- what is it?
    a. Information
    b. Pricing $
    c. Cost of financing and estimated monthly payment $
  2. Step 3 of the planned buying process is fitting the expenditure into your budget — Can you afford it?

The negative effects of making a purchase when the monthly payments, up-front costs, and continuing costs of owning a vehicle, motorcycle, camper, or boat do not fit into your budget may last for years. It is understood that many of you are not in the financial position at this time in your life to make a large purchasing decision such as the one you are working with in this assignment. That said, the purpose of this assignment is to stimulate you to consider the decisions you will have to make when you are in the position to make a large purchase.

Rather than asking you to complete another budget with the additional expenditure, provide a well-written paragraph addressing whether you would be able to add this additional expenditure into your current budget. What steps would you have to make to fit this payment into your monthly budget? If you are not in the financial position to make a major expenditure now, when do you think you would be in the position to do so?

  1. Steps 4 & 6 in the planned buying process is comparison shoppingand determining the best buy.(Step 5 in the planned buying process is negotiating. Because you are not actually making a purchase decision at this point, we will not complete step 5. However, in the “real world” it is an important part of this process.)
    If you were going through this process in reality, you would look at the alternatives and talk to the sellers. For purposes of this assignment, use the pre-shopping research of the two alternatives above to determine the best buy.

    a. What is your best buy from the two alternatives above?

  2. Why do you prefer this alternative to the other one?

7.The suggest that in the planned buying process, the potential buyer should act as if no needs exist. Why?

  1. In a well-written paragraph, explain why the purchase of extended warranties (or service contracts, buyer protection plans, maintenance agreements) is not recommended.

 

  1. People should not tell sellers what they can afford to pay. Why?

 

  1. Explain the financial advantages of renting a house or apartment and the financial advantages of owning a home.
  2. Buying Your House ~Chapter 9 cover concepts essential in the process of purchasing a home. Even more than in the first part of this assignment when you “purchased” a vehicle or other major item, the decision to purchase a home is a significant, major, and complicated process. Although most people do not make this type of purchase often, the consequences of making a mistake are usually large and long lasting.

This PFP assignment asks you to follow several of the steps outlined in Chapter 9 for the purchase of a home. If you already have a primary residence, then feel free to complete this assignment for a second/vacation home. Because the process of buying a home is so involved, we will go through the basics as an introduction to the complex process. As I recall in reading through your surveys, quite a few of you have a goal of purchasing a home in a few years, so this should help you to understand some of the basics of the process.

Get your finances in order – There are several things that you can do in preparation to make the process easier in the long run. First, you should obtain a credit check from the three credit reporting agencies (Transunion, Experian, Equifax). You also should get pre-approved by the lender before you start hunting for the house. Pre-approval is based on your actual income, debt history, and credit history. It provides you with the information you need to seek a home that you can afford, and it strengthens your negotiation position when you make an offer on a home.

Step 1 – Prioritize wants  – Develop a list of features you desire from your dwelling. Prioritize the listed features by assigning a score of 1, 2, or 3 (with 1 = must-have
features and 3 = nice-to-have features).  Note: You must have at least 4 features.

1.  Feature #1 – what is it?—–>
Priority (1-3)              —–>

  1. Feature #2 – what is it?—–>
    Priority (1-3)              —–>
  2. Feature #3 – what is it?—–>
    Priority (1-3)              —–>
  3. Feature #4 – what is it——>
    Priority (1-3)              —–>
  4. Step 2 – Select two alternatives to research.As an example, you may research two single family homes, or a single family home, a condo, or a mobile home; two condos; or any variation of two dwellings. You can look at any realator’s web site to find this information. For each of these two alternatives, the information you will need to locate is as follows:
  • information such as a home review, location, size, or other information helpful in evaluating the alternatives under consideration,
  • price information for each of your alternatives, and
  • financing information available for each alternativessuch as down payment, points, closing costs, taxes and insurance, monthly mortgage, and length of loan, financing terms, and other financing information . You will not be able to find all of this information but find what you can to allow for an informed comparison of the alternatives.
  • Link(Links to an external site.)- Mortgage calculator to use ( nerdwallet)

Alternative #1- what is it?
a. Information
b. Pricing
c. Cost of financing and estimated monthly payment $

  1. Alternative #2- what is it?
    a. Information
    b. Pricing
    c. Cost of financing and estimated monthly payment $
  2. Select preferred alternative:
    a. What is your preferred alternative from the two alternatives above?
    b. What is the price?
    c. Why do you prefer this alternative to the other one?
  3. Estimate your monthly housing costs– Click on the link  mortgage calculator for new house(Links to an external site.) to estimate how much house you can afford. (this link worked for me, you can use another mortgage calculator if you can’t get the link to work) Here is another calculator I found:

http://money.msn.com/home-loans/home-buying-calculator.aspx (Links to an external site.)

use the financial information for Addison Lane found directly below.

Addison Lane’s financial information ~
Gross Monthly Income:
Wages $2,550.00
Investment/Dividends $500.00
Other $250.00
Monthly Expenses:
Car payments $346.00
Alimony paid $500.00
Credit card payment $145.00
Other debts $408.00

Enter the data required including the financing data from your preferred alternative (above) and click calculate

    a. Which income/expenses data are you entering into the calculator: yours or Addison’s?
b. What was the total gross monthly income?
c. What were the total monthly expenses?
d. What did you enter for the loan term (years)?
e. What did you enter for the interest rate (%)
f. What did you enter for down payment?

  1. Calculated results – available mortgage limits:
    (Note:  Depending on the cost of the house you gave in previous answers, if you are using the Addison’s information, they may or may not be able to afford a mortgage at this time.)
    a. What was the available mortgage payments —$
    b. What was the affordable home amount— $

17 a. What is a point or interest point?

b. What is the point fee for the preferred home that you researched? If your preferred home does not have a point, calculate what the point fee would be if there was a 1 point fee. (Show your work.)

  1. Link – video about deceptive car adds(Links to an external site.)

Watch the short video about car ads and what to be cautious about.  Then   list 2 things to be aware of that may not be true about a car ad.

  1. Most people associate negotiating with vehicle purchases, however, there may be opportunity to negotiate with sellers for other high-priced items.  Describe the process of negotiating.  Do you think it’s a good idea to negotiate the price of an item?

 

 

 

 

 

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