Reference no: EM132708408
Question - Tracey would like to purchase a condo worth $450,000 with condo fees (including utilities) of $400/mo, annual taxes of $1,800 and closing costs of $4,500.
She works as a Marketing Coordinator earning $84,000/yr gross income (net income $59,000).
Her expenses include rent ($1,500/mo), food & clothes ($500/mo), cell & intranet ($100/mo), miscellaneous ($150/mo).
Assets include: a car ($10,000), RRSPs ($30,000), a savings account ($20,000) and a recent inheritance of $50,000.
Liabilities include: a car loan ($150/mo, $2,000 outstanding), a credit card with a $10,000 limit paid in full monthly.
Required - Based on the information above show your calculations for each of the following questions:
A) Calculate Tracey's current monthly cash flow.
B) In order to purchase the condo, first determine 2 down payment options for Tracey (high ratio & conventional). How much would the down payment be and where would Tracey get the money from?
C) Calculate Tracey's monthly mortgage payment if she had a conventional mortgage on her new condo and selected a 5 year term at a fixed rate of 3.85%, with a 25 year amortization.
D) Calculate Tracey's Gross Debt Service Ratio if she purchased the condo.
E) Calculate Tracey's Total Debt Service Ratio if she purchased the condo.
F) If Tracey had a good credit score do you think she would be approved for this mortgage? Why?