Personal Finance (MindTap Course List)
13th Edition
ISBN: 9781337099752
Author: E. Thomas Garman, Raymond Forgue
Publisher: Cengage Learning
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Can Olivia and Anthony Afford This Home Using the Monthly Income Loan Criterion?
Next week, your friends Olivia and Anthony want to apply to the Fourth Global Bank for a mortgage loan. They are considering the purchase of a home that is expected to cost $125,000. Given your knowledge of personal finance, they’ve asked for your help in completing the Home Affordability Worksheet that follows. (Note: When completing the form, round each dollar amount to the nearest whole dollar.)
To assist in the preparation of the worksheet, Olivia and Anthony also collected the following information:
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Their financial records report a combined gross before-tax annual income of $125,000 and current (premortgage) installment loan, credit card, and car loan debt of $1,823 per month.
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Their property taxes and homeowner’s insurance policy are expected to cost $3,125 per year.
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Their best estimate of the interest rate on their mortgage is 7.5%, and they are interested in obtaining a 15-year loan.…
Before you are able to purchase a home you need to get pre-qualified and determine the maximum amount you can afford for the mortgage payment. The mortgage company that you visit uses the qualifying ratios 29/41. After speaking with the mortgage broker and answering several questions, the broker compiles this information regarding your income and expenses:
You have a monthly income of $5,500.
Your significant other that is living with your and will be on the loan earns $4,500 monthly.
You have 2 car payments, one is $325 and the other is $280.
Your significant other has a motorcycle payment of $450.
You have a credit card payment of $25.
Your significant other has a credit card payment of $180.
The annual property tax in the area that you are considering to purchase the house has an average amount of $2800, while the average home insurance is $800 annually.
Determine the anticipated monthly payment of the mortgage based on the given ratios.
A) The Front-End (AKA: Housing) Ratio: ?
B)…
Local Real Estate Research the local real estate ads (online) and find a home you would like to purchase. Include a link to the home listing in your report. Also include an estimate of the total cost after financing as well as the time it will take to pay off if paying monthly.
Search for houses in Laredo Texas
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- Most of us have had experience renting. Share your experience. List two good things you have done in the past that were helpful to you when you were searching for and renting an apartment. Also, name two mistakes you have made or lessons you have learned in renting an apartment. If you have never rented an apartment, what are the four things you think are most important when finding and renting an apartment?Explain why you have never rented.arrow_forwardDIRECTIONS Use the information below to fill out a consumer equity form and calculate the net worth for each family. Net worth can be a useful tool to measure your financial progress from year to year. Your net worth is a grand total of all assets what vou own) minus liabilities (what vou owe: debts). It's important to understand that vour income Isn tine only Tactor that determines your wealtn. Occupation Annual Income Retirement Investments Real Estate Vehicles Credit Card Debt Emergency Fund Checking Account Household Items FAMILY A FAMILY B Nurse and Sales Appliance Installer $105,000 combined $45,000 $35,000 $22,000 Owns a house appraised at $224,000 with a mortgage balance of $202.000 Owns a house appraised at $180,000 with a mortgage balance of $126,000 New truck with Blue Book value Used sedan with retail value of $32,000; owes $35,000 of $9,500; paid for Used SUV with a retail value of $17,500; owes $14,500 $13,000 None $1.000 $5.000 $2,500 $650 Antiques: $5,000 Electronics:…arrow_forwardSuppose you had the exact amount of money to buy your dream property. Would you pay cash or get a mortgage? Why? If it's relavent to your answer you can state a dollar amount and explain with numbers not words.arrow_forward
- John rey combong is considering a loan to finance her college education. He currently owes money on several charge accounts and credit cards. What actions would you recommend?arrow_forwardWhich of the following do you not need to take into account when you retire? A) the cost of living in your city or state B) whether your money comes from active or passive income C) your monthly expenses D) how much you have saved in your retirement fundarrow_forwardFirst-time homeowners often use FHA loans to finance their home. Go to fha-home-loans.com and find out the current requirements to qualify for an FHA loan. They may differ slightly from that described in the book because the underwriting requirements frequently change. Summarize the types of loans that are currently available. What is the highest loan-to-value ratio that you could obtain?arrow_forward
- PREPARE A PERSONAL SFP: a. Get a one piece of yellow paper b. Write your current savings and everything that you own ( clothes, pen, pencil, etc.) c. Write the ammount that you owe to your friends, family members, parents (tuition) d. Deduct the amount you owe from the amount you own e. Associate amounts owned with assets and amount owed with liabilities with the net amount as equity.arrow_forwardMr. Kofi Briggs has maintained a satisfactory account with your branch for a period of 5 years. He is a mechanical engineer of 40 years old who runs a professional office engaged in considering and contacting work for the Tema development corporation, Tema, as well as for the private sector. Today Mr. Briggs calls to discuss with you his housing mortgage loan matter under your banks mortgage loan scheme for private house ownership. For the discussion he had produced a contractor’s estimate of the cost of a private house he plans to build. The cost of the house was estimated at GHȼ30million. He says he has been allocated a plot of land at Tema and he has been given all the necessary documents. He is applying for a mortgage loan of GHȼ20million repayable within a period of 10 years. He has in his house ownership savings account a total of GHȼ16million, more than the minimum savings required of beneficiaries under the scheme. You are prepared to help him. Your bank takes a legal mortgage…arrow_forwardClassify the type of expenditure in the following transactions. Tuition paid by your parents is _______. A new office building is _______. A. consumption expenditure; consumption expenditure B. investment; investment C. government expenditure; investment D. consumption expenditure; investment Thank you!arrow_forward
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