Case Study

Patty would like to purchase a condo worth $$450,000$ with condo fees $($including utilities$)$ of $$400/$mo$,$

annual taxes of $$1,800$ and closing costs of $$4,500.$

$$ She works as a Marketing Coordinator earning $$96,000/$yr gross income $($net income $$65,040)$

$$ Her current expenses include rent $($$$1,500/$mo$),$ food & clothes $($$$500/$mo$),$ cell & intranet $($$$100/$mo$),$

gym membership $($$$50/$month$),$ travel$/$entertainment $($$$200/$month$),$ miscellaneous $($$$150/$mo$)$

$$ Assets include: a car $($$$10,000),$ RRSPs $($$$30,000),$ a savings account $($$$20,000)$ and a recent

inheritance of $$75,000$

$$ Liabilities include: a car loan $($$$150/$mo$,$ $$2,000$ outstanding$),$ and a credit card with a $$5,000$ limit paid

in full monthly.

Based on the information above show your calculations for the following questions as applicable:

A$)$ Would you recommend a conventional or high ratio mortgage for Patty? Provide rational for your

recommendation.

B$)$ Based on your recommendation how much would she require for the down payment and what money

could she use for her down payment?

C$)$ What would be the mortgage amount Patty would need to apply for?

D$)$ Based on the information provided what is the maximum monthly mortgage payment can Patty afford?

E$)$ What other factors will be taken into consideration before Patty is approved for this mortgage?