The paper provides the rent or buys decision on the basis of Real Estate property tax rate and loans
finance
Description
Paper/Presentation Assignment:
Prepare an analysis and recommendation paper based on the following scenario:
I. Given the case:
1) Housing payment to income (HTI) <36%
2) Total Debt to income (DTI) < 43%
3) Loans available:
a. Conventional requires 20% down payment,
i. 30 year fixed rate mortgage= 4.00%; credit score > 680
ii. 10/1, the rate is fixed for 10 years, then can adjust once per year thereafter,
rate=3.625%, loan amortizes on a 30 schedule; credit score >720
b. The government requires 3.5% down payment, minimum credit score 620
i. FHA 30 year fixed rate mortgage =3.875%; Mortgage insurance Premium=
0.055% of the loan amount and paid monthly
ii. FHA 15 year fixed rate mortgage =3.125%
4) Real Estate appreciation in the local area is averaging 7.5% growth year over year
5) Real Estate property tax rate in the local area is 1.25% of the purchase price paid annually
A) Couple buying their first home:
Jane and John Doe are considering buying their first home. First, they have to compare renting
versus buying. Apartments near their workplaces go for $1,900 for a two-bedroom, 2.0 baths.
There is no rent control for the area. Condominiums with similar square footage and number of
bedrooms and bathrooms are selling for $300,000 with homeowner association dues of $372
per month, which includes property insurance.
Given:
Income and debt:
Combined yearly income $90,000
Credit card debt= $300/month
Student loans= $920/month on $110,000 @ 8.00% Credit scores and savings:
Equifax score = 740, 715, respectively
Transunion = 690, 710, respectively
Experian= 680, 685, respectively
Savings =$75,000
