Ross, $$70,000$ gross income

net income after taxes$)$

Monthly Expenses $($Jamie Lee and Ross

combined$)$:

Utilities, $$160$

Food, $$325$

Gas$/$Maintenance$,$ $$275$

Credit card payment, $$0$

Car loan payment, $$289$

Entertainment, $$300$

Questions

Using Your Personal Financial Plan sheet $22,$ compare the advantages and the disad$-$

vantages of renting a home or apartment to those of purchasing a home.

Jamie Lee and Ross are estimating that they will be putting $$40,000$ from their savings

account toward a down payment on their home purchase. Using the traditional finan$-$

cial guideline suggestion of "two and a half times your salary plus your down pay$-$

ment," calculate approximately how much Jamie Lee and Ross can spend on a house.

Using Your Personal Financial Plan sheet $24,$ calculate the affordable mortgage

amount that would be suggested by a lending institution based on Jamie Lee and

Ross's income. How does this amount compare with the traditional financial guideline

found in Question $2?$

Use the following amounts for Jamie Lee and Ross's calculations:

$10$ percent down payment.

$28$ percent for TIPI

$$500\mathrm{.}00$ per month for estimated combined property taxes and insurance.

$5$ percent interest rate for $30$ years $($see Exhibit $7-7).$

Jamie Lee and Ross found a brand$-$new three$-$bedroom, $2\frac{1}{2}-$bath home for sale in a

quiet neighborhood. The listing price is $$275,000.$ They placed a bid of $$260,000$ on

the home. The seller's counteroffer was $$273,000.$ What should Jamie Lee and Ross do

next to demonstrate to the owner that they are serious buyers?

Jamie Lee and Ross received a signed contract from the seller accepting their $$273,000$

offer! The seller also agreed to pay two points toward Jamie Lee and Ross's mortgage.

Calculate the benefit of having points paid toward the mortgage if Jamie Lee and Ross

are putting a $$40,000$ down payment on the home.

Calculate Jamie Lee and Ross's mortgage payment, using the $5$ percent rate for

$30$ years on the mortgage balance of $$233,000.$