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Home Buying Case Study

Home Buying Case Study. By Daniel and Shelby Sanders. Breakdown. Scott and Trish have a gross income of $75,000 Trish has a better education now and has new job offers which would require a move

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Home Buying Case Study

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  1. Home Buying Case Study By Daniel and Shelby Sanders

  2. Breakdown • Scott and Trish have a gross income of $75,000 • Trish has a better education now and has new job offers which would require a move • If they sell their current house they can pay of its mortgage and have $30,000 towards a down payment on another home • They are looking for a similar sized house, close to schools and in a nice neighborhood for their children

  3. Option One • 2944 Harvest Meadow Dr. Belleville, IL 62221 • Four bed • 2 full bath, 1 half • $185,000 Pros: Friendly area, close to schools, they have enough money for a 16% down payment and would not take long to save up for other 4 Cons: High utility bill due to the pool as well as maintenance. Young children may not be safe around it.

  4. Option Two • 214 Anderson LnBelleville, IL 62221 • Three bed • 2 full bath, 1 half • $165,000 Pros: Family friendly community, child safe area, close to schools. They have 18 percent down payment, could save easily for other 2 Cons: Built in 1968, subject to possible damages to occur, unfinished basement

  5. Option Three • 2412 Richland Prairie Blvd Belleville, IL 62221 • Three bed • Three bath • $950 per month Pros: This is renting they have more disposable income, enough rooms for kids, still located close to schools and a friendly neighborhood Cons: No ownership of house, may have restrictions due to landlord

  6. Option Four • 509 S 74Th St Belleville, IL 62223 • Two bed • Three full bath • $124,900 Pros: Closer to main city for shopping and seeing the city, close to schools. Can make 20% down payment with current money. Cons: One car garage, only two bedrooms, not much room for more kids or family.

  7. Differentiating Want From Need • Option one would be more want than need, its more luxury, but still affordable. (chosen) • Option two is good for them as well, they have enough room for the kids and themselves and a better price • Option three is renting and very affordable, enough space for the whole family and the will have more disposable income • Option four is alright for the family, the kids share a room and so will the parents, close to city but not much room for more people.

  8. Down Payment • For a 20% down payment on this house they need $37,000, with the money they would get from selling their house they would only have $7,000 left to save. With 6,520 monthly gross income, they would save the rest within two months, then proceed to start buying the house.

  9. Initial Costs

  10. Mortgage Approval Bankrate.com pre-approved this family for a 15 year loan of up to $268,903 for 6.375, they only need a fraction of the maximum amount. With this families situation they should look to make additional savings for their kids. If they made bigger payments then required they could pay for the loan within 15 years and still live well. A house payment of $1,400 a month would be required, previous house payment was 1,050 with Trish’s raise, this is easily manageable.

  11. Paying Off The Mortgage M O N T H L Y P A Y M E N T S 600 500 400 300 200 100 0 Years

  12. Best Choice After all the research we did we found option one to be the best for this family, it is more than they need in the time being, however if they decide to have another child they will have room and it meets all of their other needs. They could choose to stay here for the rest of their lives.

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