30-year conventional conforming mortgage (source: Bankrate.com)

Down payment: 20%

FICO score needed: min. 700-719

WaterMark Homes LLC

NMLS #1838; State Lic #MC1838

Rate: 3.750% at 0.00 pts

45 day rate lock

You have just been offered a full-time position in Cambridge and want to live close to where you will be working. The above condo is currently listed for sale at $575,000 in Cambridge. It last sold for $435,000 in July 2005. This 1,128 square foot condominium has 2 bedrooms and 2 baths. The annual property taxes are estimated to be $5220. In research on home insurance, youve discovered that an average policy in Cambridge at this price level will cost about $1,080 per year.

Financing information for the potential property purchase is given above. In addition, your savings, targeted towards a home purchase, are $140,000.

You have a monthly car finance obligation (instalment) of $300 which you are paying off over the finance period of 4 years and $200 per month on your consolidated student loans.

Your broker has calculated closing costs, separate from the down payment on this property, to be $20,000. Assume that you will need to offer the listed price to stand a good chance of being accepted by the seller.

Q. Assuming that your new position has a starting monthly salary of $9,000, using the affordability ratio of 38% rule (this ratio is to include other debt obligations), what is the likely maximum mortgage loan that you could qualify for based on monthly income & this rule?

Q.Based on your savings for the home purchase, what would be an acceptable maximum purchase price given this maximum mortgage loan calculated above?

Q. What would be the maximum purchase price based on the minimum acceptable downpayment from your savings and the stipulated percentage downpayment?

Q.What contingency clause would be important for you to request for inclusion in the real estate sales contract for this condo?

Q.When purchasing ones primary residence, list two useful pieces of advice for the purchaser.