• Assume you have graduated from a 4-year degree and have been offered a starting salary of $4,500 monthly or $54,000 annually.

• You have student debt for approximately $20,000, for which you need to pay $200 PER MONTH for 10 years.

• You use 1 credit card and the monthly payment is $100.

• You have been building your credit and have a good credit score which allows you to get a mortgage loan at 4% for 30 years.

• The following condominium is in the market and you are analyzing your options to purchase this home.

Condo Price	$ 200,000
Real Estate Tax (Year)	$ 2,280
Home Insurance (Year)	$ 600
Mortgage	30 years
Mortgage Rate	4.0%

• You are considering the between the two below financing options:

Option A
Down Payment	20%
Savings for Down Pmt	$40,000
Loan Amount	$160,00
Interest rate	4%
Mortgage monthly payment	$763.20
PITI	$1,003
Front End Ratio	22%
Back End Ratio	29%

Option B
Down Payment	10%
Savings for Down Pmt	$20,000
Loan Amount	$180,000
interest rate	5%
Mortgage monthly payment	$966.60
PITI	$1,207
Front End Ratio	27%
Back End Ratio	33%

1. Assuming, your take-home (after taxes, health insurance, etc.) pay is 75% of your salary, calculate for both options A and B, how much cash/income you will have after paying for the house-related expenses and consumer debt expenses.

   • This is the amount of income you will have for living expenses (child care, food, utilities, etc).

   • Hint: Remember to deduct all debt payments (mortgage, real estate tax, home insurance, student loans and credit cards