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HOME BUYING CASE STUDY By: Russell, Aaron, Noman

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

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HOME BUYING CASE STUDY By: Russell, Aaron, Noman

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  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 $3,000 401k $18,000 Value of two cars $8,000 Personal Property ________ $40,000

  4. NET WORTH DEBTS -$12,800 Credit Cards -$21,000 Student Loans -$14,000 Auto 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/monthor $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)

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