By Tyler Gowans Andro Batinic and Josh Clark John Berka Credit Score 551 Assets 1200 in checking 4050 in savings 5000 in CDs 49 89000 in 403b plan ID: 324418
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Slide1
Home Buying Case Study
By:
Tyler Gowans,
Andro
Batinic
, and Josh ClarkSlide2
John Berka
Credit Score: 551
Assets:
$1,200 in checking
$4,050 in savings
$5,000 in CDs (4.9%)
$89,000 in 403(b) plan
$26,482 in an IRA
$
18,000 in his car
$15,028 in 3 growth mutual funds
$190,000 in his house
$
50,000 in personal property
His total net worth is $353,760.Slide3
Liabilities:
$45,000 in debt
Monthly expenses average $4,000
M
ortgage payment is $1,228
Car payment is $529
Monthly child support of $420
H
e also deposits $650 in his 403(b) monthly
He has no will and a $250,000 term life policy that still names his deceased wife as the beneficiary.
Based on his assets and liabilities John can afford a monthly payment ranging from $1,750-$2,450Slide4
Housing Option #1
Pros and Cons
Pros: Walking distance to “best areas of the city”, owners remodeled the home and replaced most of the problems in the home that come with age.
Cons: Built in 1912, commute to work could be long.Slide5
Housing Option #2
Pros and Cons
Pros: Small, meets John’s needs, affordable, easy commute.
Cons: Older building (built in 1940), smallSlide6
Housing Option #3
Pros and Cons
Pros: Easy commute
Cons: No information on website, Expensive for John’s needs.Slide7
Housing Option #4
Pros and Cons
Pros: Affordable for John’s current situation, privacy, safety, jetted tub, built in 2001, very low crime rate (we checked), he could pay for a large portion of it just by selling the place he is in now.
Cons: John doesn’t need that much space.
Slide8
Buying Housing Option #4
Down Payment: $33,180 – if he sells his house he is currently living in (worth $190,000) he would have enough for the down payment plus some.
Maximum Mortgage John could qualify for would be around $300,000 based on a 30 year fixed with an option to refinance once his credit score increases.Slide9
Needs and Wants
Needs: Shelter, Privacy, and Safety.
Wants: Jetted Tub, 4 bedrooms and 4 bathrooms, low crime rate.Slide10
Paying it off
If he pays the minimum monthly payment of $1,217.32 John will pay the house off in 30 years unless he decides to refinance.
The total John would pay in interest is $10,617.60Slide11Slide12
Conclusion
The best choice for John would be to stay in the house he is currently residing in since the home is already close to being paid off.
John would be likely to live there until retirement age where he could move into a retirement community.