In United States, As a first-time home buyer, you and your spouse are searching for a home in Orange County, including City of Irvine. You are looking for three bedroom and two bath condominium or townhouse, more than 1,800 square feet, two car garages, built after year 2014, in a nice location, close to restaurants, grocery shopping, and easy access to freeway. You and your spouse both works, and combined salary is $180,000 per year. Your credit score is 660, and your spouse credit score is 740. You have monthly student loan payment of $200 per month with three (3) years to pay off the student loan. Car payment total $250 per month with three years remaining. You really want to replace your 2004 Honda Civic, which has been paid off, with a newer car which will cost approximately $300 per month for 5 years, plus additional down payment of $5,000 after trade-in the 2004 Honda Civic. You have saved up $200,000 in saving account. You plan to use up to $180,000 for down payment of this home. You plan to stay in this home for at least 5 years and move to a larger home if your future income could afford the price. Jeffrey Lu of Coldwell Banker has searched and offered you and your spouse a list of home to choose from (on blackboard content MLS-2022.01.08.1line and full report. Price less than 1.2 Mil

You and/or your spouse need to get a pre-approve letter from bank. Please answer the following questions.

1. If you insist to buy the new car with additional $300 car payment per month, can you get pre-approve your home purchase? If yes. Up to what amount can you get finance for this purchase?

2. In support of your conclusion in one above, what debt to Income ratio do you use to qualify your home loan? Calculate both front end and back-end ratio for you and your spouse. What is the maximum loan amount you can qualify them?

3. What if the purchase price changes upward? With maximum down payment at $180,000, & the best rate you can find do not change, then illustrate the impact of increase purchase price on the loan amount, mortgage payment & on the front end and back-end ratio? Can you afford to increase the purchase price?

4. Would you choose not to purchase of new car with monthly payment of $300, prior to buying your home? Explain Why?

5. Which lender provides the best 30 years FIXED rate mortgage, lowest closing cost in your search? In support of answer, compare by at least three lenders, (a) the fixed rate mortgage terms, (b) APR, (c) closing cost?

6. Which lender provides the best ARM terms. In support of answer, compare at least three lenders, (a) the ARM rate mortgage terms, (b) APR, (c) closing cost?

7. About your credit score (a) How to improve your credit score? (b) How much reduction on the interest rate after your credit score rise to 740 from 660?

8. Which homes can you and your spouse buy from this list?

9. What advice do you have for you and your spouse? (1) Buy now at most You can afford or (2) defer the purchase till You make more income? Explain Why? Show you calculation to support each of your answer when applicable.

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