1. Cole Thompson Finance 1050 Oct 19, 2016
Home buying case study
Cole Thompson
Finance 1050
Oct 19, 2016

2. Financial Situation – Cole Thompson
Income/Expenses
Maximum Mortgage Loan
Net Monthly income: $3100
Current Housing Expense: $500
Other Expenses: $1450
After Saving $500 Cole will have $1650 a month for a housing budget
Gross Yearly = $60000/12 = 5000 x .28 = – 200 = $1200 Max Monthly Payment
Credit Score = 774
30 Year Interest Rate Qualified for =3.75
15 Year Interest Rate Qualified for =2.75
Down Payment Available $7500

3. Home #1 Townhouse Pros: Cons: Ten Minute Drive to work
No Maintenance (HOA)
Familiar to the Area/schools/amenities
Not a large dog friendly neighborhood
No fenced yard
HOA Payment $110 a month

4. Plus an additional $110 a month for Home Owner Association Dues
Home 1# Townhouse PITI
15 Year 2.75
Principle and Interest: $995.70
Taxes .074% of home value per SL county): $132.58
Homeowners insurance: Approx $50
Total=$
Principle and Interest: $
Taxes .074% of home value per SL county): $132.58
Homeowners insurance: Approx $50
Total=$
Plus an additional $110 a month for Home Owner Association Dues

5. Home #2 Condo Pros: Cons: More affordable than option 1.
No maintenance (hoa)
Upgraded Kitchen
Pool
Pet Friendly neighborhood
No Basement
Only 2 Bedrooms
Large hoa $170 a month
One car garage
Less appealing schools
Not a fenced yard

6. Plus an additional $170 a month in Home Owners Association dues
Home #2 Condo PITI
Principle and Interest: $819.71
Taxes .074% of home value per SL county): $109.15
Homeowners insurance: Approx $50
Total=$933.03
Principle and Interest: $1,201.16
Taxes .074% of home value per SL county): $109.15
Homeowners insurance: Approx $50
Total=$1,314.48
Plus an additional $170 a month in Home Owners Association dues

7. SMART Buying & Closing costs on home option #2 Condo
Credit Report Fee $15
Title-Closing/Escrow Fee $135
Appraisal Fee $465
Recording Mortgage $95
Tax Service Fee $79
Lender Origination Fee $1,245
Down payment $35,400
Title-Lenders Title Insurance $627
Title-Title Insurance Endorsements $40
Escrow Fees: 1 $
HOA Start up Fees $500
Total: $40,510.80

8. Amortization Schedule
30 Year
15 Year
Principal: $177,000.00
Interest: $118,097.25
Taxes, PMI, Insurance & Fees : $40,794.00
Total of all Payments: $335,891.25
Principal: $177,000.00
Interest: $39,208.85
Taxes, PMI, Insurance & Fees :$20,397.00
Total of all Payments: $236,605.85

9. Best Immediate option:
The best immediate option for Cole is to stay where he currently resides and save for a down payment of 20% to negate any mortgage insurance. Where its not pertinent for him to buy a home at this point, it is the most fiscally responsible choice.
He currently has $7500 saved towards a down payment, and can save approximately $1000 a month. He needs to save a total of $41,000, he could save that in about 34 months.
As he continues to save and make continual payments on his current debts his credit score will remain in tact and the best option will be a 15 year 2.75% assuming rates stay similar.