1) Jill buys a house for $800k, lives there for exactly 10 years and sells it. Suppose Jills annual cost of ownership is exactly equal to the annual rent she would have paid to live in the same house. Suppose the price of Jills house grows 4.5% annually.

Suppose selling expenses are 8% of the sale price.

Compute Jills annual IRR from owning net of renting.

(hint: look at the buy vs rent slides, assume there is no mortgage or buying expense.)

2)

Jim has an annual income of $183,000.

Jim is looking to buy a house with monthly property taxes of $140 and monthly homeowners insurance of $70.

Jim has $1,500 in monthly student loan payments and an average monthly credit card bill of $500.

Apple bank has a maximum front end DTI limit of 26% and a maximum back end DTI limit of 41%. Both limits must be satisfied.

Apple bank is offering a fully amortizing 30 year FRM at an annual rate of 5%, with monthly payments, compounded monthly.

What is the biggest loan Jim can get?

Jim has an annual income of $183,000.

Jim is looking to buy a house with monthly property taxes of $140 and monthly homeowners insurance of $70.

Jim has $1,500 in monthly student loan payments and an average monthly credit card bill of $500.

Apple bank has a maximum front end DTI limit of 26% and a maximum back end DTI limit of 41%. Both limits must be satisfied.

Apple bank is offering a fully amortizing 30 year FRM at an annual rate of 5%, with monthly payments, compounded monthly.

What is the biggest loan Jim can get?