Harold and Maud just graduated from college, got married, and are starting their first jobs in Chicago. Harold is a school teacher and Maud is a marketing representative for the Chicago Blackhawks hockey team. Harold is making $32,000 a year and because he is working in special education, his student loans are forgiven. Maud is making $28,500 and is paying $200 a month in student loans. They both drive 10-year-old cars and have only the furniture they had in college. Both are working downtown, and they are looking for a place to live. 

a. What are the benefits and drawbacks of renting downtown, renting outside of Chicago, or buying a small house or condominium? What would you recommend for Harold and Maud?

b. Harold and Maud decided to buy a house because their parents had done so and encouraged them to do the same. List the selection criteria they should use to find the perfect location and house to purchase.

c. Harold and Maud decide to buy a two-bedroom condominium, located within a 75-minute drive from their work (without traffic jams) or a 30-minute train ride. They are looking at financing options for their first mortgage. For their first home loan, what would you recommend and why, given their life stage? Besides the down payment, what other expenses would they occur?

d. Harold and Maud have been in their condominium for two years and rates have dropped 2%. They are expecting their first child in six months. What should Harold and Maud consider in making the decision to refinance or not? What would you advise Harold and Maud to do?

e. Fifteen years go by and Harold and Maud now have three children – 14, 12, and 4 years old. Harold is now principal of the school where he started teaching, and Maud is now the director of sales and promotions for the Chicago Bears. They sold the condominium and have been living in their current house for 13 years. They would like to move to a bigger house in the same school district. Advise Harold and Maud on their options for selling their home, the fees associated with a sale, the pros and cons of using a realtor versus selling the home on their own, and real estate loans they should consider. Harold and Maud would like this home to be the last home they live in while they finish their careers in Chicago and support their children through college.