Create an Account

Already have account?

Forgot Your Password ?

Home / Questions / Dave and Diane Starr of New Orleans Louisiana both of whom are in their late 20s currently...

Dave and Diane Starr of New Orleans Louisiana both of whom are in their late 20s currently are renting an unfurnished two bedroom apartment for $1200 per month plus $230 for utilities and $34 for

Dave and Diane Starr of New Orleans, Louisiana, both of whom are in their late 20s, currently are renting an unfurnished two-bedroom apartment for $1,200 per month, plus $230 for utilities and $34 for insurance. They have found a condominium they can buy for $170,000 with a 20 percent down payment and a 30-year, 6.5 percent mortgage. Principal and interest payments are estimated at $860 per month, with property taxes amounting to $150 per month and a homeowner s insurance premium of $900 per year. Closing costs are estimated at $4,200. The monthly homeowners association fee is $275, and utility costs are estimated at $240 per month. The Starrs have a combined income of $90,000 per year, with take-home pay of $5,800 per month. They are in the 25 percent tax bracket, pay $225 per month on an installment loan (ten payments left), and have $39,000 in savings and investments outside of their retirement accounts. (a) Can the Starrs afford to buy the condo? Use the results from the Garman/Forgue companion website or the information on page 276 to support your answer. Also, consider the effect of the purchase on their savings and monthly budget. (b) Dave and Diane think that their monthly housing costs would be lower the first year if they bought the condo. Do you agree? Support your answer. Assume that they currently have $10,000 in tax deductible expenses. (c) If they buy, how much will Dave and Diane have left in savings to pay for moving expenses? (d) Available financial

 

May 16 2020 View more View Less

Answer (Solved)

question Subscribe To Get Solution

Related Questions