Home Buying Case Study - PowerPoint Presentation

Presentation on theme: "Home Buying Case Study"— Presentation transcript:

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 $10,617.60Slide11
Slide12

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.