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ESSENTIAL MATHEMATICS 40S

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Name:__________________________

Home Finance Unit Assignment Due Date Completed?

Review Lesson: Budgeting

Review Assignment & Affordability Project

Affordability & GDSR

Assignment 1

Mortgages: Definitions

Assignment 2A

Mortgages: Calculations

Assignment 2B

Mortgages: Spreadsheets

Assignment 2C

Home-Buying Additional Costs: Land Transfer Tax & Adjustment Calculations

Assignment 3A

Home-Buying Additional Costs

Assignment 3B

House Energy Efficiency & Maintenance

Assignment 4

Home Owner and Tenant Insurance

Assignment 5

Property Taxes

Assignment 6

Renting vs Buying

Assignment 7

Home Finance Unit Test: _____________________________


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Review Assignment: Budgeting 1. Linda owns a home valued at $175 000. a) Her estimated household expenses are summarized in the following table. Calculate her average monthly household expenses.

b) She has a monthly mortgage payment of $985.45. Calculate Linda’s average monthly cost for her home (mortgage payment + household expenses). 2. Steve and Annie rent a home for $1200 a month, not including the cost of utilities. Their estimated utility costs are summarized below. Calculate their total monthly costs for rent and expenses.


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3. Margo receives a salary of $700 a week. After her employer makes deductions from her gross weekly salary, her net weekly salary is $560 a week.

Their fixed expenses include:

a) mortgage payments of $550 per month b) payments on a car of $250 a month c) average monthly telephone bill of $31 d) average monthly hydro bill of $70 e) yearly car insurance premium of $920 f) yearly life insurance premium of $480 g) yearly home insurance of a $90 000 home at a premium rate of $0.35 per $100 of

insurance. h) annual property taxes – $2106 per year

The family estimates its variable expenses to be:

a) groceries of $550 per month b) clothing of $700 per year c) car maintenance of $400 per year d) gasoline of $70 per month e) entertainment of $500 per year f) vacation of $1000 per year g) newspapers and periodicals of $90 per year

Prepare a monthly budget for Margo on the following page.


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BUDGET SHEET Date: 1. Income 5. Personal Finances a. Regular Monthly Income $ a. Personal Loan $ b. Spouses Regular Monthly Income $ b. Investments $ c. Additional Income $ c. RRSP $ d. Other Income $ d. Life Insurance $ Total Monthly Income #1 $ e. Charities $ f. Credit Card Payments $ 2. Housing Expenses g. Service Charges $ a. Mortgage or Rent $ h. Savings** $ b. Property Tax $ i. Other Personal Finances $ c. Home/Property Insurance $ Total Personal Finances #5 $ d. Repairs/Maintenance $ e. Other Housing Expenses $ 6. Personal Expenses Total Housing Expenses #2 $ a. Groceries $ b. Clothing $ 3. Utilities c. Entertainment $ a. Hydro $ d. Gifts $ b. Gas $ e. Vacations $ c. Phone $ f. Other Personal Expenses $ d. Water $ Total Personal Expenses #6 $ e. Other $ Total Utilities #3 $ 7. Other Expenses a. $ 4. Transportation b. $ a. Public Transport $ c. $ b. Car Loan $ Total Other Expenses #7 $ c. Car Fuel $ d. Car Maintenance $ Total Monthly Expenses #8 $ e. Car Insurance $ (Sum: #2 thru #7)

f. Other Transportation $ Income minus Expenses $

Total Transportation #4 $ (#1 minus #8) (+surplus -deficit)

Comments:

Analysis:

Deficit? Where can you trim expenses?

Surplus? Can you increase your savings? Or pay down a debt or loan?


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Affordability Project: For Renters

Renting in Canada (Canada Mortgage and Housing Corporation)

Go to the following link: https://www.cmhc-schl.gc.ca/en/rental-housing

I Want to Rent

Renting is a great option for anyone wanting to have:

Things to Consider Before Renting

As a general rule, housing costs should be less than ____________% of before-tax household

income. This includes:

https://www.cmhc-schl.gc.ca/en/rental-housing


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Types of Housing for Rent in Canada Types of rentals Advantages

→

→

→

What do you need in a rental?

Finding a Rental Property Looking to find or advertise a rental property in Canada? Be sure to check (name three):


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Visiting the Rental Property Read through this section and record the following: Landlords can legally ask:

Landlords cannot legally ask:


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Lease and Rental Agreements

A _______________ lease is a good idea because it clearly specifies what a landlord and tenant

are agreeing to when renting a property.

It outlines terms for:

Resources about Renting in Manitoba

Residential Tenancies Branch

Fact Sheet – Renting in Manitoba https://www.gov.mb.ca/cca/rtb/tenant/factsheets.html First Time Renter – Renting in Manitoba https://www.gov.mb.ca/cca/rtb/tenant/firsttime.html

https://www.gov.mb.ca/cca/rtb/tenant/factsheets.html

https://www.gov.mb.ca/cca/rtb/tenant/firsttime.html


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Assignment 1: Affordability & GDSR

1. You would like to purchase a house. Your total monthly gross income from all sources is $4000. You estimate the monthly property taxes to be $300. Heating costs in the home would average $150. Your financial institution has indicated that 25-year mortgages are now at 4%. You have $15 000 savings you can use for a down payment. The house is priced at $140 000. Calculate GDSR and determine if the house purchase is affordable.

2. A group of students from rural Manitoba are planning to go to university. Someone has suggested that they purchase an older home rather than renting an apartment. After a careful analysis of their finances, the group decides that their gross monthly income would be around $3000. Monthly property taxes are estimated to be $125. Heating bills are estimated to be $150. The group can arrange a mortgage at a rate of 4.25%. The three members of the group are able to come up with a down payment of $8000. The house they wish to purchase for $50 000 over a 25-year period.

Determine the GDSR.


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3. Calculate the maximum monthly mortgage payment affordable given the following information:

a) Your gross monthly income is $1500.

The monthly property taxes are $250. The heating costs are $75 per month.

b) Your gross annual income is $37 000. The monthly property taxes are $215. The heating costs are $45 quarterly.


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Assignment 2A: Mortgages: Definitions 1. Number the following terms based on the relationship in the diagrams

provided:

_____

Principal (Loan)

_____ Selling Price _____

Down Payment

_____

Interest Amount $

_____ Interest Rate %

_____ Time (years)

_____ Principal Amount $

_____

Interest Portion

_____

Monthly Mortgage Payment

_____ Principal Portion

Replace each box

with either a

+ or -

#3

#1 #2

Old Unpaid Loan

Balance

Principal Portion

New Unpaid

Loan Balance

Past Equity

Balance

Principal Portion

New Equity

Balance

#1

#2 #3 #4

#1

#2

#3


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2. The unpaid loan balance on Juan's mortgage was $43 724 and the owner's equity balance was $15 587. The monthly mortgage payment principal portion for this month is $68.75. a) Determine the new unpaid loan balance.

b) Determine the new owner's equity balance.

3. The sale price of the home is $215 000. The down payment made is 5% of the sale price. a) Determine the down payment, in dollars.

b) Determine the equity balance and the loan balance over the first 4 months.

Month Principal Portion (monthly)

Mortgage Balance (loan owed)

Equity Balance (ownership)

Start $ 0

1 month later $ 58.75

2 months later $ 59.23




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Assignment 2B: Mortgages: Calculations

1. Arlin takes out a mortgage of $160 000 from the bank for 20 years at 4.75%.

Determine her monthly mortgage payment.

2. You take out a mortgage of $150 000 from the bank for 25 years at 4.25%.

Calculate the monthly mortgage payment.

3. Tom buys a house and borrows $75 000 over a period of 15 years at a rate of

5.5%. Find his monthly mortgage payment.


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4. Sam borrows $240,000 at 8.75%. Determine the interest portion will he pay in

the first month.

5. You owe $95 000 at 9.75%. Calculate the interest portion will you pay in this

month.

6. Jane takes out a 25-year mortgage for $320 000 at 5.25%. Determine the

interest would she pay over the life of the loan. (Hint: see example 2)


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7. You pay $675.75 per month for your mortgage and the interest portion you pay

this month is $602.08. Determine the principal portion you have paid.

8. Ellen pays $453.00 per month on her mortgage. This month $337.50 goes to the

interest portion. Calculate the principal portion she will have paid this month.

9. Sam and Laura's monthly mortgage payment is $532.31. The April interest

portion payment is $404.44.

After their March payment, the unpaid balance is $51 284.62 and the owner's

equity is $25 634.10.

a) Determine the monthly mortgage payment principal payment.

b) Determine the new unpaid loan balance at the end of April.

c) Determine the new owner's equity balance at the end of April.

10. Explain why you pay less interest in the second month of a mortgage than in the

first month.


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Assignment 2C: Mortgages: Spreadsheets

1. Alvin bought a house for $85 000. He paid $20 000 down and borrowed the rest

from the bank at a rate of 4.25% for 15 years. Prepare a schedule of mortgage

payments for a period of 3 payments.

Selling Price:_______________ Down Payment:_________________ Mortgage Principal:______________ Interest Rate:___________________ Amortization Period:__________ Monthly Payment:_______________

Payment #


Interest Portion (month)

Principal Portion (month)

Unpaid Balance (Selling-Down Payment)

Owner’s Equity (Down Payment)

Amortization Table

(rate x loan 1000) (Payment-Interest)

1 (Previous Balance-

Principal) (Previous Balance+

Principal)

2

3


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2. A house was purchased for $210 000. The buyer made a down payment of

$27,500 with the rest to be mortgaged over 20 years. The interest rate is 5%.

Prepare a schedule of mortgage payments for a period of 3 payments. Selling Price:_______________ Down Payment:_________________ Mortgage Principal:______________ Interest Rate:___________________ Amortization Period:__________ Monthly Payment:_______________

Payment #


Interest Portion (month)

Principal Portion (month)

Unpaid Balance (Selling-Down Payment)

Owner’s Equity (Down Payment)

Amortization Table

(rate x loan 1000) (Payment-Interest)

1 (Previous Balance-

Principal) (Previous Balance+

Principal)

2

3


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Assignment 3A: Land Transfer Tax and Adjustment Calculations

1. Calculate the Land Transfer Tax due on a property valued at $80 000.

2. Calculate the Land Transfer Tax due on a property valued at $100 000.

3. Betty bought a house for $185 000. She already knows that for the first $150 000 the land transfer tax will cost $900. Calculate the total land transfer tax.

4. Calculate the property tax adjustment owed to the buyer with a purchase date of May 1st and annual property taxes of $2500.

5. Calculate the insurance cost adjustment if premiums increase to $425 annually, from $325 annually (possession date is November 1st).


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Assignment 3B: Additional Costs in Purchasing a Home Questions #1-4

For the following questions, use the charts on the next two pages to determine the

additional costs and total costs in purchasing a home.

1. The Smiths live in Winnipeg and Mr. Smith has accepted a job in Brandon.

They have purchased a house in Brandon for $150 000 and have hired a

mover to move their belongings. The mover charges $1800.

The fees, charged by the lawyer they have hired, are $1000.

An appraisal has been done on their property for a fee of $140. A survey of

the property is done for $375. They call in a house inspector to be sure

that the house is in good condition. The inspector charges $400 and

recommends that the siding be replaced.

The Smiths' possession date is August 1st. The interest adjustment is $457.

Annual property taxes are $2850, for which the Smiths agree to pay for

the five months of August to December.

Before moving in, the Smiths want to build a fence and re-side the house at

a cost of $5000, replace the carpet in the living room at a cost of $4200,

and paint the master bedroom and the kitchen at a cost of $650.

The stove has to be replaced at a cost of $850.

They increase their annual insurance premium to $590 from $425 per year

and pay the additional amount for the remaining five months of the policy

year.

The cost to hook up the phone is $65 and to activate the natural gas costs

$45.


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*newly built homes only

/ Land transfer tax

and Mortgage application fees

*if down payment <20%

(including mortgage interest adjustments)

(including home insurance adjustments)


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2. Diane and Bill Roscoe are relocating from Selkirk to Thompson.

They purchase a $97 000 home and hire a mover at a cost of $1900.

The Roscoes split the cost of $3300 for re-shingling the roof with the

seller.

They decide to buy the seller's appliances for $3200.

They must pay the appraisal fee of $150 and the survey fee of $395.

The Roscoes' possession date is July 1 and the interest cost is $375.

Annual property taxes are $1575, of which the Roscoes will pay from July to

December.

Diane and Bill want the interior of the home painted and the carpets cleaned

at a cost of $1700.

The cost for hooking up the telephone is $60, and $75 for activating the

gas.

Their insurance premium increases from $375 to $425 per year, and they

pay the difference for the six remaining months of the policy year.

The legal fees are $975.


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*newly built homes only

/ Land transfer tax

and Mortgage application fees

*if down payment <20%

(including mortgage interest adjustments)

(including home insurance adjustments)


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3. A new homeowner has the following costs. Identify the one-time (or additional) costs from the list below:

4. Linnea buys a house. Two (2) of her daily (on-going) expenses are heating costs and mortgage payments. State another 2 daily (on-going) house expenses.


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Assignment 4: House Energy Efficiency and Maintenance 1. State two types of preventative home maintenance.

i.

ii.

2. State two types of emergency home repairs.

i.

ii.

3. List two ways to improve energy efficiency in a house.

(Note: it is asking for ways to improve the efficiency of how the house runs, not things you can do to save energy. For example, “Turning off the lights” is not the type of answer we are looking for)

i.

ii.

4. Manitoba recently recorded one of the coldest winters on record. State one energy-

efficient improvement a homeowner could make to their home to reduce their heating bill.


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Assignment 5: Homeowner and Tenant (renter) Insurance

1. Mike and Mary Malone have purchased a house just outside Brandon with a

Boeckh replacement cost of $85 000. They have no fire hydrants nearby, but are

within 10 km of the nearest fire hall. They wish to purchase Standard insurance

coverage with the $500 deductible. What will their premium be?

2. Ted and Alyssa bought a home with a Boeckh replacement value of $155 000.

They want a Comprehensive policy. They live in a town where all houses have fire

hydrants within 800 feet.

a) Find their premium if they choose a $500 deductible.

b) Find their premium if they choose a $200 deductible.

3. Amy and Bert Cannon have purchased a house with a Boeckh replacement value

of $355,000.00. They wish to buy Comprehensive insurance with a $500.00

deductible for their new home. They live in Metro Winnipeg. How much will the

Cannons have to pay?

4. Are you legally required to have home insurance for your home in Canada?


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5. What are the factors that determine the cost of tenant's or homeowner's

insurance?


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6. Why is it a good idea to get insurance for a house or the contents of an

apartment?

7. Nadine just moved into an apartment block. How much will she have to pay per

year to insure her belongings for $30,000.00 per year with Standard coverage and

a $500.00 deductible?

8. Andrew lives in a large apartment complex. He would like to insure the contents

of his suite for $35,000.00. What will his premium be for the year if he selects a

Comprehensive policy with a $200.00 deductible?


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Assignment 6: Property Taxes

1. A house has a market value assessment of $78 000 with a land assessment of

$8000. Determine the portioned assessment if the property is portioned at 45%.

2. Joe Kerr decides to move to another area of town. His new house is assessed at

$110 000 and the land is assessed at $10 000. Determine the portioned

assessment if the property is portioned at 45%.

3. Residential property assessment is partly based on current market value.

Identity and explain at least three factors that influence this value.

i.

ii.

iii.

4. A city has a total taxable portioned assessment base of $375 000 000. The

city prepared its budget and found that it needs to raise $22 500 000 from

property taxes. Determine the mill rate for the city.

5. The budget requirement for the City of Nall is $176 000. The taxable

portioned assessment of the city is $23 030 000. Determine the mill rate for the

City of Nall.


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6. The Ernest family owns a home with a market value assessment of $140 000 and

a land assessment of $30 000. The municipal mill rate is 22 mills, the provincial

education rate is 7 mills and the local school division rate is 20 mills. There was a

local improvement tax of $180 for the sidewalk.

a) Calculate the portioned assessment value of the home (using 45%).

b) Calculate the municipal taxes.

c) Calculate the provincial education and the local school division taxes.

d) Calculate the total property taxes, including any local improvement taxes and

a $250 provincial tax credit.

7. The Chuckers purchased a home with a house market value assessed at

$220 000 and a land assessment of $30 000. The municipal tax rate is 19 mills and

the provincial education rate 7.51 mills and the school division rate is 21.49 mills.

a) Calculate the portioned assessment value of the home (using 45%).

b) Calculate the municipal taxes.

c) Calculate the provincial education and the local school division taxes.

d) Calculate the total property taxes, including any local improvement taxes and

a $250 provincial tax credit.


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8. The Finley’s own a house with a market value assessment of $220 000 and a

land assessment of $20 000. The municipal tax rate is 25 mills and the

educational rate is 24 mills.

a) Calculate the total municipal and educational taxes.

In addition, there are two local improvements to be paid: paving

($1.50/foot) and ornamental lighting ($3.50/foot). They have 60 feet of

frontage.

b) Calculate the total local improvement taxes.

The Finley’s receive a $250 Manitoba Provincial tax credit.

c) Calculate the total taxes owed by the Finley family.


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Assignment 7: Renting Versus Buying 1. Indicate if the following are benefits for buying (B) and for renting (R):

Building equity ______

No maintenance costs ______

Landlord approval not required for

renovations ______

Acts as an investment (asset) ______

Lower insurance cost ______

No property tax ______

2. Dan would like to move out of his parents’ house. He can afford $700 per month, either for a monthly rent payment or for a monthly mortgage payment. State two (2) reasons why he should rent, rather than purchase, a place to live such as an apartment or a house.

i. __________________________________________________________________________ ii. __________________________________________________________________________

3. Josh has recently graduated from college and is looking for work in a new town. Explain 2 reasons why Josh should rent rather than buy a place to live while searching for work. i. __________________________________________________________________________ ii. __________________________________________________________________________ 4. Explain whether you would rent or buy.

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