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