"life scenario"

Meet JACK: You are a 36-year-old bachelor who has a great condo near Green Valley and Paseo Verde. You bought when the market was low for $28,000 and now it is worth $178,000. But you are ready to propose to your long time steady girlfriend and think it would be best to settle down in a single family house in the same area. Together, you would take home about $74,000 per year. You have health insurance through work, and could add your spouse at no charge. You have no savings, other than the equity in your condo. You own your car. Your credit score is 790.

Question 1

What is the price range of the home you will search for?

Your down payment may be all or some of your money available, justify why you use the amount you do. Justify your home price mathema!cally (some references to consider are the 3.5 !mes your salary rule (as in your book), the 30% rule, or the zillow home affordability calculator).

Question 2

This ques!on has 2 parts:

Part A: Discuss a search criteria for your new home; all of the following must be considered carefully and justified with logic or mathematics:

Location (consider schools if you have children, proximity to work, etc.) Neighborhood ameni!es (are you in a community with a pool, etc.) One, two, or three story Number of rooms and square footage

Part B: Perform a search with this criteria (on zillow.com, realtor.com, etc.)

Can you find what you are looking for in your price range? If not, document this and modify your search. When you find that perfect house, use its informa!on as your "contract" house. Include the address in your answer.

Question 3

Decide on a loan for this home:

Research current rates (this will depend on your credit score and income, do your best to get an accurate rate). Determine what kind of loan you will get (30 vs. 15 year, fixed vs. variable rate... etc).

Calculate your monthly payment (principal and interest). Calculate your taxes (on realtor.com website, usually) and insurance (estimated at 2% of house purchase price annually).

Question 4

Print your amortization schedule (various sites provide this online) and answer the following:

How much interest will you pay over the term of the loan if you only make the minimum monthly payment? What percent of your payment goes towards principal in month 1? In month 120?

How long will it take to pay off the loan if you pay 20% more than the monthly payment each month? Is that something you can currently afford?

attach your amortization schedule here.

Question 6

Determine your start up costs:

How much will it cost to move? Use logic or mathematics in your answer. Does the house need any repair work?

Question 7

Monthly Income:

Monthly Income: $

Monthly Expenses:

Use logic and mathematics to fill in each expense. Note: if the employment in the scenario includes benefits, write 'N/A' in those categoriesMonthly Mortgage Payment (principal, interest, taxes insurance): $

Monthly HOA Dues: $ Health Insurance: $ Retirement: $ Total Monthly Debt Payments (car, student loan, etc.) $ Power Bill: $

Gas Bill: $ Internet Bill: $ Grocery: $ Cell Phone Bill: $ Transporta!on Total (bus, car, gas, car insurance, etc.): $ Health and Beauty (haircuts, beauty supplies, medicines, etc.): $ Child expenses (if applicable): $

Entertainment (streaming services, recrea!on, gym membership, etc.): $

Clothing: $ Property Maintenance: $ Misc/Other: $ Total Monthly Expenses:$

(if applicable)

Question 8

Using your responses to the previous ques!on, calculate your monthly net cashflow.

Monthly net cashflow: $

Ques!on 9

Summarize your findings by deciding how sustainable your lifestyle is.

Are you comfortable and have what you need, or want? Are you able to save each month, or do you hardly cover your bills? If you are having a hardtime "making it" then decide what it would take for your family to be more comfortable (not including some kind of windfall like the lottery, be realisc). If you are very comfortable, could you afford a life change, like having a child?