# solution

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.),

gym membership (\$50/mo.),

travel/entertainment (\$200/mo.,

miscellaneous (\$150/mo.) â€¢ Assets include: a car (\$10,000),

RRSPs (\$30,000)

, a savings account (\$20,000)

and a recent inheritance of \$50,000 â€¢

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:

A) Calculate Traceyâ€™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 for each option and where would Tracey get the money
from? C) Calculate Traceyâ€™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
Traceyâ€™s Gross Debt Service Ratio if she owned the condo E)
Calculate Traceyâ€™s Total Debt Service Ratio if she owned the condo
F) If Tracey had a good credit score do you think she would be
approved for this mortgage? Why?

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