Reference no: EM132679974

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.

1. She works as a Marketing Coordinator earning $84,000/yr gross income (net income $59,000)
2. Her expenses include rent ($1,500/mo), food & clothes ($500/mo), cell & intranet ($100/mo), miscellaneous ($150/mo)
3. Assets include: a car ($10,000), RRSPs ($30,000), a savings account ($20,000) and a recent inheritance of $50,000 
4. Liabilities include: a car loan ($150/mo, $2,000 outstanding), a credit card with a $10,000 limit paid in full monthly.

Based on the information above show your calculations for each of the following questions:

Problem A) Calculate Tracey's current monthly cash flow

Problem 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?

Problem 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

Problem D) Calculate Tracey's Gross Debt Service Ratio if she purchased the condo

Problem E) Calculate Tracey's Total Debt Service Ratio if she purchased the condo

Problem F) If Tracey had a good credit score do you think she would be approved for this mortgage? Why?