Case Study: With a raise from her employer, Sophia Monet, 31, is looking for a new home. She has come to you for help. Financially, she is secure, but she is risk averse. Her salary is $130,000 a year, but she does not know how much she should spend on purchasing a home. Her current housing expenditures include rent for her apartment of $2,300 per month and tenants insurance premiums totaling $800 per year. Although she has been paying her rent on a monthly basis, Sophia would prefer the accelerated biweekly payment frequency for her mortgage payments. Her month bills include a $550 lease payment for her 2018 BMW i2 and a $200 loan payment. Sophia research has shown that property taxes and home insurance premiums for the average home in the city in which she lives, are about $5,000 and $1,200 per year. She is unsure of the maintenance and heating costs, but estimates them at $2,500 and $3,000 per year. Sophia thinks that a high-end condominium might best suit her lifestyle. The condominium fees associated with the property would be about $500 per month. Sophia wants to own her home, since as the real estate values increase, the value of her home will increase. Local property values have been increasing at 5% per year over the past seven years. One concern about buying a home is the immediate cost of down payment and closing costs. These closing costs are about $5,000. She wants to make a 20% down payment. Sophias bank will use a maximum TDS ratio of 40% to qualify her for a mortgage. In addition, the posted 5-year mortgage rate is 5.35%, compounded semi-annually. Case Study Questions: 1. List and describe four types of housing the Sophia should consider. 2. Determine the maximum mortgage payment that Sophia would be qualified to pay. 3. What would be the accelerated biweekly payment on her mortgage? 4. At an amortization period of 25 years, what is the maximum mortgage amount that Sophia would be qualified to receive? 5. If Sophia makes a 20% down payment, what is the maximum value of the home that she would be qualified to purchase? 6. Including maintenance, closing costs, and her required down payment, how much money does Sofia need to set aside