Part VI-Homeownership It is now nearly nine years since you have graduated and you have begun house hunting. You have found three different houses that look promising. All of the houses are in high demand and you will have to offer full asking price: i. The first house is a 980sq. ft., 2-bedroom/1.5-bathroom ranch on 0.45 acres of land. It is priced at $100,000 and has yearly taxes of $4,320. ii. The second house is a 2-bedroom/2-bathroom, 1,020 sq. ft. bungalow on 0.1 acres of land. It is priced at $115,000 and has yearly taxes of $3,600. iii. The third house is a 3-bedroom/2-bathroom, 1,200 sq. ft. Cape Cod on 0.68 acres of land. It has yearly taxes of $4,500 and a list price of $120,000. You have also been talking to a bank and have found that you will need a down payment of at least 10% on any house you choose. You have your earlier investment (from Part IV) as well as an additional $5,500 tax refund you just received. - Calculate the minimum down payments for the three houses. - Which of the down payments for the three houses can you cover? - Determine how much money you will use for a down payment on each house you can cover. (Note: you can choose the minimum down payments, use all of your savings for the down payment, or choose any amount in between.) Now you need to calculate the monthly costs for each house (you can ignore any house where you do not have enough money for the minimum down payment). When it comes to the mortgage you have two options. You can choose a 15-year mortgage which has an APR of 6.5% or a 30-year mortgage which has an APR of 7.2\%. Homeowners insurance for any of the houses will cost you $600 per year. - Calculate the monthly payments on the 15-year and 30-year mortgages for each house. - Find the monthly taxes and insurance cost for each house. - Find the monthly cost of each individual mortgage. Now need to see which of the mortgages you qualify for. Recently you have received a 6% raise at work. Your bank requires that you be able to cover the cost of the monthly mortgage, taxes, and insurance with 28% of your adjusted monthly income. - Calculate your current monthly salary. - Find your AMI (adjusted monthly income) after your raise. Be sure to include all relevant numbers/expenses from the earlier sections (i.e. the appropriate outstanding loans). - Using 28% of your AMI, determine your qualifying number. - Based on the qualifying number, which of the mortgages do you qualify for? - What will you decide to do? Justify your choice