Reference no: EM133115830
The Jacksons are considering selling their current residence, buying a small home near Avery's parents for $220,000 with a $100,000 30-year mortgage at 3.5%, and investing the net proceeds in their retirement accounts and education accounts. They assume they will incur 2% in transaction costs for the purchase and 6% for the sale.
They have asked you the following:
-How much will they be able to invest in their retirement accounts and education accounts after selling the old house and buying the new house?
-If the Jacksons purchase the new house one year from today, what will be the balance on their mortgage when they retire?
More information to help solve the problem:
-Old residence was purchased 12 years, 9 months ago for $110,000. Excellent condition with no major repairs foreseen soon. Old residence is currently valued at $330,000 and there's $60,000 left on the mortgage [interest rate is fixed at 5.5%] - they have 4 years, 7 months remaining on the loan.
-Their ideal retirement age is 65 years old. They both are 49 years of age. Assumption - It's January 1, 2021.
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: The Jacksons are considering selling their current residence, buying a small home near Avery's parents for $220,000 with a $100,000 30-year mortgage at 3.5%, an
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