Loan Officer - Group Activity
Congratulations! You just got hired as the newest loan officer at The Bank of Vermont. You and your team have to evaluate loan applicants. You must then determine if you will give your applicant the mortgage that they seek. If you make a wrong decision you could cost the bank money and consequently your job could be in danger. The first application to come across your desk is the following:
Anna (age: 32) and Peter Tackett (age: 33) are married with two children Patrick (age: 2) and Abbie (4 age: 4). The Tackett’s have been renting an apartment for the past 7 years and now would like to buy a house. They have found a house which they would like to buy. They have come to you to see if they can get preapproved for the mortgage.
House Price: / $359,000Beds: / 4 beds
Baths: / 3 baths
House Size: / 2,968 sq. ft
Lot Size: / 0.39 acres
Additional Information about Anna & Peter:
· Credit Scores
o Anna: Experian: 680 Equifax: 710 TransUnion: 705
o Peter: Experian: 780 Equifax: 750 TransUnion: 762
· Income Information:
o Anna works as an engineer at IBM and has a yearly salary of $60,000. Also each of the last 3 years Anna has received a yearend bonus of $3,000.
o Peter works as a construction worker. His last three biweekly paychecks amounted to $1,605; $1,395; $1734. (This is gross income)
· Debt Obligations:
o Anna has a car payment on her 2010 Toyota Prius for $299 a month
o Peter has a truck payment on his 2006 Ford F150 for $238 a month
o Anna has student loans from UVM which total $225 a month
o Their credit card debt totals $58 a month.
· Savings and Investments
o TDBank Savings Account Balance: $7,500
o TDBank Checking Account Balance: $4,300
o Fidelity Investment Account Balance: $23,580
o Roth IRA Balances: $11,000
o 401K Balance: $18,000
Mortgage Information:
· 30-year Fixed Rate Mortgage Options:
POINTS / INTEREST RATE0 / 4.75%
1 / 4.625%
2 / 4.5%
**These interest rates only apply to individuals with average credit scores greater than 680. If your average credit score is below 680 then add 1.75% to the APR
· 15-year Fixed Rate Mortgage Options
POINTS / INTEREST RATE0 / 3.875%
1 / 3.75%
2 / 3.625%
**These interest rates only apply to individuals with average credit scores greater than 680. If your average credit score is below 680 then add 1.75% to the APR
· 3/1 Adjustable Rate Mortgage Option (30 year)
APR: 3.825%
After 3 years the interest rate will increase 1% (27 years remaining)
After 6 years the interest rate will increase by 1% again (24 years remaining)
**These interest rates only apply to individuals with average credit scores greater than 680. If your average credit score is below 680 then add 1.75% to the APR
· Upfront Costs
o Down Payment: minimum 5%
o Application fee: $365
o Origination fee:
§ 1.5% of mortgage with a 5% down payment
§ 1.25% of mortgage with a 10% down payment
§ 1% of mortgage with a 20% down payment
o Appraisal fee: $292
o Inspection fee: $400
o Property Survey: $154
o Title Search: $350
o Title Insurance: $275
o Homeowners’ Insurance: $3.50 per $1,000 of the home purchase price
o Real Estate Taxes: $19 per $1000 of assessed value. (The assessed value of the house is 95% of the appraised value)
o Points (optional)
· PMI: $75 a month if Loan to Value Ratio is above 80%
______
· Project Requirements
o Eligibility Analysis
§ As a bank loan officer will you give out a mortgage to this client? You need to calculate all of the loan requirements and include them in your final report. Think about the 4 C’s of Credit.
o Calculate costs of the loan (If you are willing to give your customer a loan, pick for them the most appropriate loan choice. If not, describe to your client how they fell short and what they can do to fix their situation.) Include all calculations: SHOW WORK
§ Calculate Closing Costs – Include all calculations: SHOW WORK
§ Calculate monthly PITI payments – Include all calculations: SHOW WORK
o Should your customer take out the mortgage? Even though your client may pass every eligibility test, should they purchase this mortgage? Think about their entire situation. Can they comfortably afford a mortgage along with all of their other expenses? (Minimum 1 paragraph explanation)
o Final Project must be typed
Loan Officer - Group Activity
Congratulations! You just got hired as the newest loan officer at The Bank of Vermont. You and your team have to evaluate loan applicants. You must then determine if you will give your applicant the mortgage that they seek. If you make a wrong decision you could cost the bank money and consequently your job could be in danger. The first application to come across your desk is the following:
Jacob is 25 years old and works for an accounting firm. He has been renting for the past 3 years since he graduated from UVM. He now thinks he is ready to buy his first place and take advantage of the low interest rates as well as the drop in housing prices in the area. His girlfriend Jasmine may move in with him to help offset costs; however she will not be on the mortgage. Jacob’s parents have offered to give him $5,000 towards a down payment and closing costs.
Town House Price: / $123,500Beds: / 2 beds
Baths: / 1 baths
House Size: / 960 sq. ft
Lot Size: / ---- acres
Additional Information about Jacob:
· Credit Scores
o Experian: 645 Equifax: 680 TransUnion: 662
· Income Information:
o Jacob’s salary at KPMG earns him $40,500 annually
o Jacob coaches soccer at a local high school in the fall and earns $2,000
o Jacob works part-time as a bartender and earns $13.50 an hour including tips (assume he averages 8 hours a week)
· Debt Obligations:
o Jacob has a car payment on his 2002 Honda Civic for $109 a month
o Jacob has student loans from UVM which total $225 a month
o Jacob’s credit card debt totals $35 a month.
o If Jacob buys this townhouse the association fees will be $100 a month
· Savings and Investments
o NEFCU Savings Account Balance: $6,500
o NEFCU Checking Account Balance: $2,150
o Roth IRA Balances: $3,000
o 401K Balance: $7,425
Mortgage Information:
· 30-year Fixed Rate Mortgage Options:
POINTS / INTEREST RATE0 / 4.75%
1 / 4.625%
2 / 4.5%
**These interest rates only apply to individuals with average credit scores greater than 680. If your average credit score is below 680 then add 1.75% to the APR
· 15-year Fixed Rate Mortgage Options
POINTS / INTEREST RATE0 / 3.875%
1 / 3.75%
2 / 3.625%
**These interest rates only apply to individuals with average credit scores greater than 680. If your average credit score is below 680 then add 1.75% to the APR
· 3/1 Adjustable Rate Mortgage Option (30 year)
APR: 3.825%
After 3 years the interest rate will increase 1% (27 years remaining)
After 6 years the interest rate will increase by 1% again (24 years remaining) etc…
**This interest rate only apply to individuals with average credit scores greater than 680. If your average credit score is below 680 then add 1.75% to the APR
· Upfront Costs
o Down Payment: minimum 5%
o Application fee: $265
o Origination fee:
§ 1.5% of mortgage with a 5% down payment
§ 1.25% of mortgage with a 10% down payment
§ 1% of mortgage with a 20% down payment
o Appraisal fee: $222
o Inspection fee: $350
o Property Survey: $114
o Title Search: $325
o Title Insurance: $275
o Homeowners’ Insurance: $2.75 per $1,000 of the home purchase price
o Real Estate Taxes: $19 per $1000 of assessed value. (The assessed value of the house is 95% of the appraised value)
o Points (optional)
· PMI: $75 a month if Loan to Value Ratio is above 80%
______
· Project Requirements
o Eligibility Analysis
§ As a bank loan officer will you give out a mortgage to this client? You need to calculate all of the loan requirements and include them in your final report. Think about the 4 C’s of Credit.
o Calculate costs of the loan (If you are willing to give your customer a loan, pick for them the most appropriate loan choice. If not, describe to your client how they fell short and what they can do to fix their situation.) Include all calculations: SHOW WORK
§ Calculate Closing Costs – Include all calculations: SHOW WORK
§ Calculate monthly PITI payments – Include all calculations: SHOW WORK
o Should your customer take out the mortgage? Even though your client may pass every eligibility test, should they purchase this mortgage? Think about their entire situation. Can they comfortably afford a mortgage along with all of their other expenses? (Minimum 1 paragraph explanation)
o Final Project must be typed
Loan Officer - Group Activity
Congratulations! You just got hired as the newest loan officer at United Bank of Florida. You and your team have to evaluate loan applicants. You must then determine if you will give your applicant the mortgage that they seek. If you make a wrong decision you could cost the bank money and consequently your job could be in danger. The first application to come across your desk is the following:
Glen and Shirley are newly retired and are looking to move out of Vermont. They are going to move to the warm, sunny climate of Florida. They will move into a condo in Orlando with enough bedrooms for their children and grandchildren to come and visit them. Glen and Shirley just sold their house in Vermont for $349,000. Their equity was 87% of the sale price.
Some info about the new condo: Beautiful end unit condo at Reunion Grande is now available. The views of the community, golf course and theme parks are breathtaking. The amenities Reunion has to offer are amazing. From the 3 Championship Signature golf courses, Tom Watson, Arnold Palmer and Jack Nicklaus, to the state of the art tennis courts, Water park, community pools, spa, fine dining and so much more. Minutes away from Disney theme parks and convenient to Orlando/Tampa International airports.
Condo Price: / $415,000Beds: / 3 beds
Baths: / 2 baths
House Size: / 1,430 sq. ft
Lot Size: / ---- acres
Additional Information about Glen & Shirley:
· Credit Scores
o Glen: Experian: 805 Equifax: 810 TransUnion: 799
o Shirley: Experian: 815 Equifax: 823 TransUnion: 818
· Income Information:
o Glen earns $1,150 a month from Social Security
o Shirley earns $950 a month from Social Security
o Glen and Shirley have an annuity that pays them $800 a month
o Glen and Shirley withdraw 4% annually from their retirement accounts
· Debt Obligations:
o Glen owns a boat that he is trying to sell however he currently pays $215 a month for payments
o If they purchase this condo the association fees will be $275 a month.
· Savings and Investments
o Key Bank Savings Account Balance: $28,500
o Key Bank Checking Account Balance: $12,150
o Combined Roth IRA Balances: $403,700
o Combined 401K Balance: $207,425
Mortgage Information:
· 30-year Fixed Rate Mortgage Options:
POINTS / INTEREST RATE0 / 4.75%
1 / 4.625%
2 / 4.5%
**These interest rates only apply to individuals with average credit scores greater than 680. If your average credit score is below 680 then add 1.75% to the APR
· 15-year Fixed Rate Mortgage Options
POINTS / INTEREST RATE0 / 3.875%
1 / 3.75%
2 / 3.625%
**These interest rates only apply to individuals with average credit scores greater than 680. If your average credit score is below 680 then add 1.75% to the APR
· 3/1 Adjustable Rate Mortgage Option (30 year)
APR: 3.825%
After 3 years the interest rate will increase 1% (27 years remaining)
After 6 years the interest rate will increase by 1% again (24 years remaining)
**These interest rates only apply to individuals with average credit scores greater than 680. If your average credit score is below 680 then add 1.75% to the APR
· Upfront Costs
o Down Payment: minimum 5%
o Application fee: $365
o Origination fee:
§ 1.5% of mortgage with a 5% down payment
§ 1.25% of mortgage with a 10% down payment
§ 1% of mortgage with a 20% down payment
o Appraisal fee: $292
o Inspection fee: $400
o Property Survey: $154
o Title Search: $350
o Title Insurance: $275
o Homeowners’ Insurance: $4.50 per $1,000 of the home purchase price
o Real Estate Taxes: $23 per $1,000 of assessed value. (The assessed value of the house is 95% of the appraised value)
o Points (optional)
· PMI: $75 a month if Loan to Value Ratio is above 80%
______
· Project Requirements
o Eligibility Analysis
§ As a bank loan officer will you give out a mortgage to this client? You need to calculate all of the loan requirements and include them in your final report. Think about the 4 C’s of Credit.
o Calculate costs of the loan (If you are willing to give your customer a loan, pick for them the most appropriate loan choice. If not, describe to your client how they fell short and what they can do to fix their situation.) Include all calculations: SHOW WORK
§ Calculate Closing Costs – Include all calculations: SHOW WORK
§ Calculate monthly PITI payments – Include all calculations: SHOW WORK
o Should your customer take out the mortgage? Even though your client may pass every eligibility test, should they purchase this mortgage? Think about their entire situation. Can they comfortably afford a mortgage along with all of their other expenses? (Minimum 1 paragraph explanation)
o Final Project must be typed