1. HOME BUYING CASE STUDY By: Russell, Aaron, Noman

2. Family Profile Bob - 31 yrs old -$3,500 Monthly Salary Pina - 28 yrs old-Recently laid off - No children - want to have a baby in the next 10 years. - Living paycheck to paycheck for years, haven’t been tracking their spending - Are forced to move into something cheaper

3. Net Worth ASSETS $1,000 Checking Account $10,000 Savings $3,000401k $18,000 Value of two cars $8,000Personal Property ________ $40,000

4. NET WORTH DEBTS -$12,800Credit Cards -$21,000 Student Loans -$14,000Auto Loans _______ -$47,800

5. Our Family Expenses Monthly Income = $3,500 $800-$1200 Rent (Including utilities) $500 Food $600 Auto Payments $150 Auto Insurance $100 Health Insurance $200 Other expenses $250 Credit Card Payments $500 Savings = $3,500 TOTAL (If Renting for max. $1,100)

6. To BUY VS. To RENT Rentals In Salt Lake City: Rental #1 2 bed / 2 bath *Washer/Dryer in rental, covered parking ------------------------------------ $720/month or $8,640/year Rental #2 1 bed / 1 bath *AC, Close to park ------------------------------------ $650/month or $7,800/year

7. To BUY VS. To RENT Buying Example #1 Non-Traditional Home: Condo – Salt Lake City 2 Bed/1 Bath Purchase Price $117,000 675 sq/ft FHA Loan 4.5% Interest Rate 3.5% down – (minimum) $4,095 30 yr. Loan Term HOA Monthly - $100 ------------------------------ Monthly Payment - $991.51 Buying Example #2 Traditional Single-Family Home – Salt Lake City 2 bed / 1 bath Purchase Price $155,000 1,204 sq/ft Conventional Loan 4.5% Interest Rate 20% down - $31,000 (No mortgage Ins) 30 yr. Loan Term No HOA ---------------------------- Monthly Payment - $891.51

8. To BUY VS. To RENT Reasons to Buy House offers space & privacy (Single-Family Home) Allows you to build up equity over time Possibility of value appreciation over time Allows for more personal freedom to remodel & landscape to suit your taste No chance of rent rising over time, fixed monthly payment Reasons to Rent No Down payment required(Deposit Only) No home repair or maintenance No Grounds keeping No property taxes You don’t lose anything if property value goes down(depreciation). Many times Amenities such as swimming pools, tennis courts, play areas, and community gyms are included

9. Step by Step Home Buying Determine Needs vs. Wants How long do we plan to live in area? What is my credit score? (740+ for best rates) What is my Debt to Income Ratio? How much can I afford for down payment? 3.5% is minimum, 20% or more waves the mortgage insurance

10. Calculating Mortgage & Affordability

11. 15 Year Loan or 30 ? 15 Year Loan $150,000 Purchase Price 3.5% Down 3.5% Interest Rate Annual Taxes($1,400) Annual Insurance ($800) Life of Loan Total: =$237,362.40

12. 15 Year Loan or 30? 30 year Loan $150,000 3.5% Down 4.5% Interest Rate Annual Taxes($1,400) Annual Insurance ($800) Life of Loan Total: =$392,850.00

13. Conclusion Advice for our family: Pay down debts (use some of savings) Save $500/mo. Keep Renting Wife should work until baby comes In 4-5 Years will be better time to buy (improve credit, save more, pay off debts)