****Please help with this case study (attached file), I'm particularly stuck on the chart from question 4, if you can help with anything after as well that would be great!

Life Situation:Megan and Sean are looking for their first home in Ontario. They are in their late 20s and have been married for three years. They still have a small amount left to pay towards their student and car loans. They do not have any children but plan to in the near future. Both Megan and Sean have steady stable jobs with good advancement opportunities.

Use the financial information given below and information you obtain from the Internet to answer the questions (1 ? 9 below). Use theCase Study Answer Templateto write up your answers.

Financial Information

Combined Gross Annual Salary

$75,000

After-tax salary

$60,000

Budget

Rent	800
Food	400
Entertainment	300
Clothing/Laundry	400
Telephone/Cable/Internet	200
Car payments	400
Car expenses	200
Insurance ? life, car	220
Insurance - apartment	30
Household	100
Student loans	300
Personal expenses	150
Miscellaneous	150
Savings	1,350*
Total	5,000

*Savings- usually each month they contribute $100 to their emergency savings, $300 to their RRSPs and $950 to their house savings

Net Worth

AssetsLiabilities

Chequing Account 1,500 Car 6,000** Emergency Savings 6,000 Student Loans 8,000*** Car 14,000 RRSPs 15,000 House Savings 45,000 Total Assests 81,500 Net Worth 67,500

** They will be finished paying forthe car loan in 16 months *** They will be finished paying for the student loans in 28 months

Case Study Answer Template You may need to modify some of the tables to suit your circumstances. Question 1 Bank: CIBC March 9th 2016 Date: Mortgage Type 6 mos 1 yr 2 yr 3 yr 4 yr 5 yr 7 yr 10 yr Fixed rate closed NA 2.84% 2.79% 3.39% interest 4.09% 4.79% 5.85% interest 6.09% Fixed rate -open 6.95% 6.35% NA NA NA NA NA NA Variable - closed NA NA NA NA NA NA NA NA Variable - open NA NA NA NA NA NA NA 4.00% Broker: True north mortage March 9 th 2016 Date: Mortgage Type 6 mos 1 yr 2 yr 3 yr 4 yr 5 yr 7 yr 10 yr Fixed rate closed NA 1.98 % 2.24 % 2.44% 2.64% 2.69% 3.39% NA Variable interest rate - Closed NA NA NA NA NA NA 2.30% NA Question 2 Recommendations Why? Length of Term? 7 years Typically mortgages are paid off in more than 10 years, 7 years allows them to have paid off their home before their children (once they have them) begin university. Fixed or Variable? Variable Variable rates are generally lower than fixed rates (since they are calculated based upon prime rate) thus the couple would save some extra money. Open or Closed? Closed Closed rates are less risky as interest rates do not change. This is important if the couple decides to have children soon, the stability is needed in their lives. Question 3 Down Payment Savings 45,000 Closing Costs 4,000 CMHC premium 3,312 Revised Down Payment 37,688 Question 4 TDS GDS Step 1 Step 2 $25000 $1875 2.44% 2.44% 25 yrs 25 yrs 114, 457 114, 457 Step 3 Affordable monthly mortgage payment Step 4 Interest rate is Amortization is % years. Affordable Mortgage amount Step 5 Affordable home purchase price Therefore, they should buy a house priced $114, 457 or less. Question 5 Revised Budget Question 6 $225,000 House Payment Frequency Accelerated Weekly Mortgage Amount $ Interest Rate Monthly % Payment amount Annual mortgage payments Amortization interest costs Amortization Why do accelerated weekly payments save so much money? Accelerated weekly payments save money simply for the fact that less interest is accumulated. The longer an individual has a loan, the more money must be paid in interest and by reducing the amount of time money is owed (through a mortgage) the more money will be saved. Question 7 Amount of Interest Saved New Amortization Question 8 New Amortization Number of years Weekly payment $ Equivalent monthly payment $ Question 9 Recommendation: Interest saved compared to 25 year amortization Recommended amortization and explanation