Personal Finance 1st Edition by Jack R. Kapoor

Exercise 3

Housing Decisions

When Mark and Valerie Bowman first saw the house, they didn’t like it. However, it was a dark, rainy day. They viewed the house more favorably on their second visit, which they had expected to be a waste of time. Despite cracked ceilings, the need for a paint job, and a kitchen built in the 1980s, the Bowmans saw a potential to create a place they could call their own.

Beth Young purchased her condominium several years ago. She obtained a mortgage rate of 6.75 percent, a very good rate then. Recently, when interest rates dropped, Beth was considering refinancing her mortgage at a lower rate.

Matt and Peggy Zoran had been married for five years and were still living in an apartment. Several of the Zorans’ friends had purchased homes recently. However, Matt and Peggy were not sure they wanted to follow this example. Although they liked their friends’ homes and had viewed photographs of homes currently on the market, they also liked the freedom from maintenance responsibility they enjoyed as renters.

How could the Bowmans benefit from buying a home that needed improvements?