Brooke Armijo

Brianna Ghersi

Andrew McCann

Mitchell Visser

CURRENT HOME: A three-bedroom, two-bath home on a .5 acre lot. The house is 15 years old and is 3,000 square feet in size. Their monthly house payment is $1,050.

3 Bed, 1 Full Bath, 1,838 Sq Ft, 4,792 Sq Ft Lot, Built in 1900. With a $30,000 down payment the loan would come out to be $114,900 on a 30 year loan it will be $817 monthly payments.

A 2 bedroom 1 bathroom apt. 900 sqft. Payments of $750 monthly.

A condo with 3 bedroom 2 bathroom, 1876 sqft. With a monthly payment of $917.

Rental

PROS CONS

Cheapest/most affordable option Small

No commitment for longer than

usually 1 year

Have to share 1 bathroom

Not a loan Have to invest in something that

isn’t owned

Landlord repairs damages Could be evicted anytime

Non-Traditional

PROS CONS

Very large More expensive than buying a

house

Affordable price Can’t make permanent

improvements

Can rent or buy Close neighbors

All get own room Usually doesn’t allow pets

Traditional

PROS CONS

Can invest Consequences of missing

payments

Usually comes with garage No one else to repair damages

Can make permanent

improvements

Regular maintenance is required

Allow pets to your expense Long term commitment

It would be a wiser choice for this family to buy over rent. It will allow them they ability to save over the years for their kids or themselves and retire without commitments. Staying in one home will help the kids throughout their education years so they can be confident and comfortable.

House Choice 3 Bed, 1 Full Bath, 1,838 Sq Ft, 4,792 Sq Ft Lot, Built

in 1900. With a $30,000 down payment the loan would come out to be $114,900 on a 30-year loan it will be $817 monthly payments.

Differentiating needs from wants We’re picking this house because it covers all of their

needs. It would be nice to have a bigger and newer home but with this house they can afford it and it will get the job done.

A 20% down payment would be $22,980.00 and if they sold their home before they moved they would already have $30,000.

$114,900 HouseDown Payment $30,000

Points 1700Loan Origination Fee 850Loan Application Fee 250

Appraisal Fee 250Title Search Fee 200Title Insurance 500

Attorney Fee 400Recording Fee 20Credit Report 50

Terminate and Radon Inspection Fee

150

Notary Fee 50

Total Initial Cost $34,420

We think that they should get a conventional fixed rate mortgage. We think they should choose the 15-year loan because it is affordable and they could pay the house off faster.

Year of Mortgage 6% Interest Loan

30 Year $510 a Month

20 Year $610 a Month

15 Year $717 a Month

How long will it take to pay the home off? Assuming that they choose a 15-year mortgage, 15-years.

What is the total amount they will pay in interest? An $84,900 loan, paying $717 a month you will pay a

total of $129,060, which is $44,160 in interest.

How much of their income will go to the mortgage? Trish and Scott make $75,000 a year, which is $6,250 a

month, and there mortgage payment is $717 a month. This makes there mortgage payment 8.72% of their monthly income.

It seems the best immediate housing choice for Trish and Scott would be to buy the 3 Bed, 1 Full Bath home that is 1,838 Sq Ft, with a 4,792 Sq Ft Lot, built in 1900.

Although smaller than the home they currently live in (3,000 sq. feet), and it has one less bathroom, the mortgage will be much cheaper in their new home ($333 less per month).

The other choices were too small for their family; if Trish and Scott decide to have another child, this home should be able to accommodate them. Each child now can have their own room, and if they have another, two of them can share.

Even though the home is old, because they will be purchasing it, they are free to remodel and fix up the home as they want to. They might want to consider adding a second bathroom! They might not be able to do these things in a condo, and they definitely cannot do this in a rented apartment.

With a 20% down payment and a 15 year mortgage, their monthly housing payment would be $717 a month.

Based on their income of $75,000 a year, their mortgage payment will end up being 8.72% of their monthly income.

Trish and Scott are likely to live in this house for as long as their family fits in to it. If they decide to have more than 1 more child, then a larger home will be necessary. If they do not have any more children, they may stay in the home for the rest of their lives.

It is wisest to stay in the home for at least 15 years to pay off the mortgage. Then, if they decide to move to another home (downsize perhaps, when the children move out), they will be clear of all their home debt and can put a down payment on another home.