I need help with my personal finance homework but its due by tomorrow morning so I would need it done...

Purchases and Financing a Home

Gary informs you that he is looking to make some changes in his life. Gary decides it might be the right time to upgrade his transportation and housing situations. Gary has decreased several of his monthly out-flows, and he now has a positive cash flow of $225.00.

Gary’s wants your opinion on the new retirement policy at his job. The company is now offering their employees a matching fund program. The company will match up to $3,600.00 per year in each employee 401 (k) plan. The company is also offering e-classes on investment strategies. The units are designed to offer employees suggestions on how to invest their 401 (k) retirement funds.

Gary is surprised at the rising cost of gas, and he decides it might be time to purchase a new SUV for $35,000. The new models have better gas mileage and attractive accessories on the dash. He still owes $15,800.00 on his two-year old pickup (which has $58,000 miles) and has found a buyer who will pay him $18,800 cash. This would enable him to pay off his current car loan and still have $3,000 for a down payment on the SUV. He would finance the remainder of the purchase price for five years at 4%.

Anticipating your objections to purchasing the SUV, Gary has an alternative plan to lease the SUV for three years. The terms of the lease are $600.00 per month, a $0.20 charge per mile over 15,000 miles annually, and $1,200 due upon signing.

Gary would also like to purchase a home. He knows that he will enjoy the advantages with ownership, and he is eager to reduce his tax burden.

Recently, Gary moved closer to work and is renting a 2 bedroom, 2 bathroom condo just inside the city limits for $1,000.00 per month plus utilities and his renter insurance has increased to $52.00 per month. Gary's neighbor is moving to another state, and he is willing to sell his unit; therefore, purchasing the unit next door could be an option.

Gary made some inquiries and found a lender that has approved him for $125,000 on 30 year mortgage @ 5%, with 10 percent down. The condo next door is listed for $120,000. Closing costs due at signing will total $3,200. The property taxes on his condo will be $2,800 per year, his Property Owners' Association (POA) fee will be $189.00 per month, and his household insurance will increase to $500.00 per if he buys the condo.

Another option would be to purchase a 3 bedroom, 2 bathroom ranch style house just outside of the city. The house is in need of some repairs, and Gary knows very little about home repairs; however, the house has a nice yard, great for entertaining. The ranch house is $130,000; taxes are $3,800 per year, and the lender is offering a 30-year mortgage @ 5% with 10% down. The closing costs at signing will be $3,300, and homeowners insurance will be $600.00 per year.

Gary Grandview Part 3 Reading Segment Revised 2.28.2013B SL