case study: Peggy and Edmond purchased their home for $350,000 six years ago, but the value of the property has grown to $500,000 since then. The outstanding mortgage balance is $318,000, with mortgage annual interest rate of 4.29 percent.

Now that Peggy and Edmond are expecting their third child, they need more space. The couple has you, as a personal financial planner, to help them understand the financing options for purchasing a new $800,000 property. Real estate fees on the sale of their current property are expected to equal four percent of the sale price. However, they don't expect to sell their current home before November.

The qualifying rate for mortgage applications is five percent. Bridge loans are available at a variable rate of five percent and prevailing mortgage rates are as follows: