NEEDED ASAP

ASSIGNMENT facts;

Bill and Kathy Collins are a professional couple relocating from Halifax to Toronto. They were referred to your mortgage brokerage by a business colleague, who noted your professionalism, attention to detail, and ability to determine the best mortgage for your client.

They want you to secure for them a mortgage. Currently, Kathy earns $164 000 and Bill $137 000. The Collins supply you with verifiable income and employment documents. They have $237 000 in their bank account and another $180 000 in a cashable investment account, having just sold their Halifax home. They have $300 000 in their RRSP accounts and $200 000 in their TFSA accounts. Their rate of returns on the RRSP average 5% and on the TFSA average 7%. They have a joint life insurance contract with a total benefit of $950 000. They are interested in buying a house priced at $1.5 million. They want to put down just enough money to obtain a conventional mortgage, which would fund the rest of the value. Although they are successful professionals, the Collins dont know much about personal finance, particularly as it concerns mortgages.

Their Beacon credit rating is quite good, coming in at 765. They missed credit card payments last Spring for two (2) months when they took a safari vacation to Africa. Both before and after the vacation they have always paid their bills promptly and responsibly. They have three credit cards: one has a limit of $25 000, another $20 000 and the third is limited at $15 000.

Other pertinent financial data is listed below:

The Collins have the following assets: approximately $83 000 worth of antique furniture; two cars, one valued at $43 000, the other at $57 000; jewelry and other collectible worth $25 000.

They use their credit cards to purchase almost everything, collecting various points rewards. Each month, normally, they pay off their card balances in full. On average, their cards run bills approximating $4 200; but there have been spikes (usually during holiday seasons or vacations) where bills exceed $8 000 per month.

The house they seek to purchase has the following pertinent data: the property taxes are $7 800 annually and monthly heating costs are $350. An appraisal would cost $2 000 because of the size and value of the house, and an inspection would cost $1 900. Legal fees for the Collins in this transaction would probably cost $2 750. Additional closing costs include professional movers $5 200; property tax adjustments $2 000; title insurance $1 500; hydro and water account set up charges, including deposits, $1 200. Land transfer taxes follow the schedule below:

Up to $50 000 of property value 0.5% $50 001-$250 000 1.0% $250 001-$500 000 2.0% Over $500 001 2.0%

PROVE: your case, showing why you recommendation makes most financial sense. Your objectives will include:

1) Calculate the amount of down payment required for a conventional mortgage, and determine a way for the Collins to afford that down payment.

2) Calculate the monthly payment of their mortgage, assuming a 5 year fixed term, 5.50% interest rate, compounded semi-annually not in advance, and a 20- year amortization. Would they be better off with a 25 year amortization? Why or why not?

3) What would they GDS be, given the above data? What about their TDS? Given the above financial information, what notes would you highlight to the underwriter? What story would you make to help them secure this mortgage?

4) Are there any additional notes you think you should write to help get this mortgage funded? Note this transaction will generate a 1% commission on the mortgage value if this mortgage application succeeds!

5) Last, the Collins want to renovate the house- estimates range as high as $145 000. They want to buy a luxury oven and stove system and then also landscape the back yard to include a swimming pool. What might you suggest to them.

You need to present a reasonable, intelligent recommendation to them. Ensure that you reflect appropriate financial calculations and considerations. The mathematical position of this case accounts for 40% of the total score for this assignment. YOU ARE BEING EVALUATED MAINLY ON YOUR ABILITY TO DEVELOP AND PRESENT A COMPELLING ARGUMENT, WHICH IS A CRITCIAL SKILL IN THIS BUSINESS ENVIRONMENT. Requirements:

1) You will make an argument for one tax structure over the other. 2) Your argument should be logical and reasonable, employing facts to substantiate your position. You will fail this assignment if you do not do take this step. 4) At all times keep written language appropriate and professional.