Home Buying

By:Charlotte Haws, Jake Cushing, Chad Shehee

Overview
Jennifer Barry
25 yrs. old
graduated college with $23,300 in debt.
$16,000 student loans, $7,300 owed on two credit cards.
shares apartment with friend. Rent is $350/mo.
earns $28,900 annually ($2,408 per month)

Rental
Pros

Cons

1. No Down Payment

1. She does not have renters insurance.

2. Avoid Risk of Falling House Prices.

2. Rent is not always constant, it can

change.

3. No maintenance charge.

3. She is putting money towards

somebody else's house.

Non-Traditional
Pros

Cons

1. Less Restrictions from lenders.

1.There is little protection involved.

2. Cheaper

2. She might end up paying more.

3. It might not have to get inspected.

3. She might pick up title issues which are

debt from the house's previous owner.

Condo/ Apartment
Cost: 74,000
Down Payment:14,800
Monthly Payment: 356$
30 year: 356 $
20 year:417$
15 year:$476

2220 E Murray Holladay Rd

Salt Lake City, UT 84117

Modest House
Pros

Cons

1. It can be cheaper for her.

1.She will live in a tight space.

2. She has the bare necessities.

2. There is nothing to special about the

place.

3. She might be able to sell it easier.

3. It might be hard to sell.

Extravagant House
Pros

Cons

1. Its nice and fancy.

1. It will be more expensive.

2. She has what she wants.

2. She might not be able to borrow as

much from the bank.

3. It is fun to show off to her friends.

3. There will be more maintenance

required.

Extravagant Home
Cost:$359,900
Down Payment:71,980
15 year: 2,317
20 year: 2,030
30 year:1,672

8000 N / 526 W RP30973

Saratoga Springs, UT 84045

Renting VS. Buying

Renting

Buying

No groundskeeping required

Allows you to build up equity over time.

No Property taxes

No chance of rent rising over time.

She will be immuned to losses due to

housing price depreciation

Possibility of propertys appreciation.

Needs/Wants
Needs to make a plan so she
can buy a home and a car
within 10 Years.
She wants to purchase a house
and a new car within 10 years.
Needs a place to live,

Budget: What can we

Jennifer Barrys annual income: $28,900
afford?
Monthly Salary: $2,400
28% of monthly salary to Mortgage payment: $675
Max monthly mortgage payment: $475
House Maximum Price:$80,000-$85,000
Down Payment on house is 20% of the cost

Only Affordable house

BuyinG
Down Payment
House Price: $73,800
20% down payment: $14,760
In this situation, a down payment of $14,760 is not realistic, she has
made a plan to start saving money, but first needs to put it into action
for a longer amount of time and needs to pay off outstanding debts.

Closing Costs
- Many factors determine the closing costs, the loan fee, loan
application, appraisal fee, and other fees and costs.
- closing cost in this situation would be 7% of the homes price.
- $5,166 is the closing costs.

Home Appreciation
The definition of Home Appreciation is an increase in value of your
home over time.
1.What determines the value of your property?
a. The land your property sits on is the biggest part of your home appreciation. No
one else has that land, it's never going to go away and disappear so the more
land your house sits on, in theory the more it shall be worth.
b. Second is location, location, location. It even affects your land's value.
c. Lastly is the upgrades, amenities or the popular features your home may have.
Such as people prefer hardwood floors vs. carpets which up your home's worth.

Investing
Gives you a 10% interest earning back potential from the stock
market

Good idea to not be house

poor so you can put money
into the stock market and make more money

Home Appreciation VS.

It's good to invest into buying a home if it's the right time for you
Investing
When you buy a home don't get the nice house that makes you house
poor you can be using that money for investing into the stock
market.
Investing in the stock market will give you a greater return in the long
run

Smart Buying Tips

1.

Differentiate want from need

-she wants a new house and new car.

-needs a place to live and transportation to work.
2.

Do your Homework

-She needs to figure out her budget for her car and house.
-compare many properties before making a decision.
-research location, and neighborhood.
3.

Make your Purchase

-Look at different finance alternatives

- negotiate a lower price. (if Possible)

Current Plan of Action

Jennifer
Barrys best option is to rent somewhere until she has paid off
oVERVIEW
more of her debts and has a higher income before trying to buy a
house.
So in the next five years she is saving $160 each month for a car. Her
savings account earns a 6% interest rate so in five years she will have
11,163.21 to put towards a new car.
And in 10 years she is saving $130 each month a downpayment for a
house her interest on that savings account is 6% so in 10 years she will
have $21,304.32 to put towards buying a house

Current Plan of Action

Monthly Expenses
Budget
Rent:$350
Debt payments:$320 But we want to up her debt payments to $450
each month instead.
Food:$400
Gas:$120
Fun, Shopping:$350
Insurance:$200
Car Savings:$150
House Savings:$130