ECONOMICS
Paula and David are looking forward to buying their first home. They have been renting a small apartment for the past four years to save enough money for a down payment. Currently, the couple has $25,000 set aside in an earmarked account. They also have access to about $20,000 through loans on their two employer-sponsored retirement plans. Paula’s parents have said they can help the couple out with a gift of $10,000 if they need it for the down payment or closing costs. The couple’s monthly finances will be tight as homeowners, at least until they get their next raises, which they are expecting in a year or two. Paula and David have found three properties—all very different—that they are considering. As is typical, all of the homes meet some of their needs, but none of the homes meet all of their needs. [unique_solution]The couple loves the convenience that city living offers. Not only are they near places to do shopping, restaurants for dining, and entertainment, they are just a short walk from public transportation. This has allowed them to avoid a challenging commute and save money on auto expenses. Of course, they have other things to consider. Paula and David are hoping to start a family in two to three years. While a one-bedroom home would work for the couple for now, they wonder how long it would be comfortable after a baby arrives. They’ve also been thinking it might be nice to have a big yard where the family could spend time outdoors. Making the selection process even more complicated. Paula’s parents are urging the couple to consider a new condominium in a complex near their house. Though they realize it’s far from the young couple’s work and public transportation, Paula’s parents point out that it’s bigger and that it will be easier for them to do babysitting when their grandson or granddaughter arrives. Decisions, decisions. Your assignment is to choose which of the three homes the couple should buy, help them select one of the two loans they have qualified for, and then write their purchase offer. House #1 This single-family home on a beautiful, landscaped half-acre lot makes you want to spend more time at home. Buyers willing to make a small investment of time and money could update the 1,500-square-foot brick charmer with all the modern amenities. Just a 15-minute drive to town. The unit has 2 bedrooms/1.5 baths, hardwood floors, washer/dryer, tool shed, fireplace, and electric heaters. Carport also included. The price is $285,000 reduced to $235,000. House #2 Nearly-new construction means you don’t have to bring your tool belt! High-end materials and appliances throughout. Corner unit (1,800 square feet) provides extra privacy and a view of downtown. HOA dues: $110/month. The unit contains 2 bedrooms/2 baths, shared laundry room, central heating, carpet/vinyl flooring, one-car garage, and community gym/pool. Offered at $219,000. House #3 This is urban living at its best. Shopping, restaurants and public transportation are practically right outside the door of this single family home just off Main Street. No yard, but walking distance from two parks. Motivated seller! The unit contains 1 bedroom/1 bath, central heat/air, updated kitchen, remodeled bath, and office. Square-foot of 1200 ft. Easy street parking. The listed price is at $ 200,000. Instructions Read the scenario above. Post your solution with supporting information and citations of sources. Develop a budget for the house purchased with monthly paychecks worth a total of $4800.00 after taxes. Expenses are around $2700.00 per month excluding the mortgage or rent payment. Develop loan options offered by banks. Examples could be like an FHA loan or standard loan. Use current interest rates on either a 30-year or 15-year mortgage note. Which year mortgage note benefits the couple the most. Include the insurance and property taxes on the house purchase for Greenwood County. What is the monthly mortgage payment for your selection? What are the benefits and drawback financially of purchasing and owning a home? How will your home purchase affect the Gross Domestic Product nationally and locally? Be specific on your answers