Congratulations, Mr. and Mrs. Idea L. Neighbor are hiring you to look for a house for them and their 9 and 15 year old children. Mr. Neighbor is an independent businessman with stores in downtown Houston and Mrs. Neighbor is a freelance writer and a homemaker with interest in community activities, sports activities for the children and does not like to drive too much. They are looking for a 2,500 to 3,000 sq.ft. house with, at least, 4 bedrooms and a minimum of 3 bathrooms in the 77095 zip code area. Their budget is 225,000 with a maximum monthly PITI payment of $2,500.

You are to prepare the following documents:

• Suggest at least 5 houses that fit their needs. You may use information from har.com (Links to an external site.) or www.trulia.com (Links to an external site.) or any other web sites to prepare a dossier of each of the houses with pros and cons of the individual house.
• Sales contract
• Find out the current interest rate for 30-year fixed rate mortgage and calculate the monthly payment for each of the houses that you recommend (using the going 30-year fixed rate).
• Only for the best house, show the Amortization schedule for the first year and show them the difference it makes if they were to add $75 extra to their monthly payment.
• Using the mortgage rate you came up with for a 30-year fixed rate mortgage, if the couples bank were to charge them .5 point for loan origination fee and 1.5 point to buy down the rate .5% (meaning charging them .5% rate less than the going interest rate) then what would be the APR of the mortgage? (show your work for full credit)
• Closing statement

You should approach the project as a sales pitch to this couple to buy a particular house that you are recommending. You should go to any of the real estate web site, as the project document says, and pick at least 5 houses that meet the couple's need. You should document the pros and cons of these houses and recommend one that you think the couple should get.

You can apply any knowledge you may have learned throughout the semester to "sell" your recommendation and make it easy for them to get it as well. For example, if the house that you are recommending is a little bit out of their budget, you can show them the various mortgage option they can use to make the particular house affordable, or if they are looking for 4-bedroom house but the house you are recommending has 6 bedrooms then perhaps you can make your case based on incremental property tax burden vs. future price appreciation, etc.

The bottom line is, the more application of knowledge that you can show in your project the better off you are. By the way you may use $2,400 as an estimate for the property tax and $2,000 for insurance. You don't have to present your project but make sure it is not too voluminous.

Regarding the ... credit score: treat the couple as having an average credit score; down payment: the couple was not planning on it but open to it provided you can show them the benefit; age of the house: they don't have any preference but again, whichever way you recommend make sure it comes with pros and cons. Also, you may want to include tips on how to get lower insurance premium or to reduce their PITI to beef up your project.