1. A family with a gross monthly income of $8,500 is considering a $250,000, 30 year, 6.25% fix rate conventional mortgage to buy a $300,000 house.

Move-in costs include the down payment, a $1,600 loan origination fee, 1 discount point, $3,500 in third party fees, 14 months of mortgage insurance premium, 2 months of property taxes, and 14 months of hazard insurance. The family estimates annual real estate taxes as 1.2%, annual hazard insurance as 0.4%, and annual maintenance as 1% of the purchase price. The annual private mortgage insurance premium is estimated as 1% of the loan amount. The household has monthly installment payments of $500 and is in the 35% marginal tax bracket.

The lender requires that the housing expense ratio be no higher than 28%, and the monthly payment ratio no higher than 36%.

a) Can this family qualify for the loan?

b) What is the total amount of the move-in costs?

2. A family with a gross monthly income of $11,000 is considering a $357,000, 30 year, 7% mortgage to buy a house priced at $375,800. The annual private mortgage insurance premium is estimated as 0.78% of the loan amount. Move-in costs include the down payment, a 1% loan origination fee, 1 discount point, $5,400 in third party fees, 14 months of mortgage insurance premium, 6 months of property taxes, and 14 months of hazard insurance. The family estimates annual real estate taxes as 1.25%, annual hazard insurance as 0.4%, and annual maintenance as 1% of the purchase price. The household has a monthly installment payment of $1,000 and is in the 28% marginal tax bracket. Maximum housing expense ratio is 28%, while maximum total monthly payment ratio is 36%.

a) Can this family qualify for the loan?

b) What is the total amount of the move-in costs?

3. Mr. Friedman is purchasing an apartment building for sale at $3.5 million. He expects to finance 70 percent of the purchase price with a mortgage loan at 8% interest with monthly payments for 20 years. The first year operating forecast, which is believed to be reliable, is presented below:

Potential Gross Income	740,000
- Vacancy Losses	37,000
= Effective Gross Income	703,000
- Operating Expenses	400,000
= Net Operating Income	303,000