REAL ESTATE MATH : Listing Price: $$1,195,000$ Address: $8264$ Scenic Ridge Ct$,$ Fort Collins, CO $80528$ Bedrooms$/$Bathrooms: $5$ beds $/4$ baths Home Size $/$ Lot Size: $5,084$ sqft $/0\mathrm{.}87$ acres Estimated Principal & Interest Payment: $$5,967$ per month Total Estimated Monthly Payment $($including taxes, HOA, insurance$)$: $$6,885$ HOA Fee: $$42$ per month $($covering amenities or services$)$ Property Taxes: $$478$ per month $/$ approximately $$5,736$ annually $($estimated based on home value$)$ Homeowners Insurance: $$398$ per year $($around $$33$ per month$)$ Utilities: Not specified $($cost for water, sewer, gas, electric, internet varies$)$ Year Built: $1997$ Estimated Home Value $($Zestimate$)$: Not provided Price per Sq Ft: $$235$ Loan Program Options: $30-$year fixed, $15-$year fixed, $5-$year ARM $($interest rates not specified$)$ Down Payment: Not specified $($amount or percentage$)$ PHASE $1$: Phase $1$: Mortgage Origination & Amortization $$ Research and compare $3$ real mortgage products $($e$.$g$.,30-$yr fixed, $15-$yr fixed, ARM$).30$ Year Fixed Rate Mortgage $-$ Interest rate fixed for entirety of the loan $-$ Average interest at $6\mathrm{.}86\%$ right now $-$ Lower monthly payments due to longer maturity $-$ Predictability due to same payment each month $-$ End up paying greater amount over time $15$ Year Fixed Rate Mortgage $-$ Higher monthly payments $-$ Pays off house faster $-$ Lower interest overall on the loan $-$ Loan is a shorter term Adjustable Rate Mortgage $($Typically $30$ yr$)-$ Given initial rate period, typically fixed at $3,5,7$ or $10-$ Different interest per rate period $-$ Interest adjustment depends on market index $-$ Beneficial if selling or refinancing early $-$ Risk of higher payments through different rate periods $$ Calculate amortization schedules and graph the results. $$ Recommend the best mortgage based on borrower needs. $($find real mortgage rates$)$ Deliverables: $$ Summary of options $$ Amortization charts $$ Mortgage recommendation Phase $2$: Mortgage Decision$-$Making $$ Model rental income and expense cash flows under each mortgage option. $$ Analyze return metrics: Cash$-$on$-$Cash Return, IRR, NPV$.$ Perform scenario testing for interest rate and property value changes Deliverables: $$ Financial model in Excel $$ Risk$-$return analysis $$ Strategic recommendation memo Phase $3$: Secondary Market & MBS Analysis $$ Explain how your mortgage could be securitized and sold. $$ Identify a real MBS prospectus and analyze its structure and risks. $$ Discuss implications of prepayment and default risk for investors. Deliverables: $$ Report on secondary market process $$ MBS risk analysis $$ Reflection on investor pricing concerns Phase $4$: REIT Investment Strategy $$ Select and analyze two residential or hybrid REITs. $$ Compare dividend yield, leverage, assets, and performance. $$ Recommend a balanced strategy between REITs and direct ownership

Deliverables:

$$ REIT comparison table

$$ Graphs and written analysis

$$ Portfolio strategy recommendation

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