Introduction: Client needs are usually the driving force in determining the best loan to use to acquire real estate. Some loans require little or no down payment while others offer lower interest rates that allow the client to obtain a larger loan. Still others reduce the clients costs during the investment holding period.

Read the scenario and respond to the checklist items.

Scenario: Henri and Lila are having second thoughts regarding their choice of a home mortgage. They thought they should just get a 15-year mortgage, but now they are not so sure. The restaurant is doing alright so far, but they are not sure about the future and they have had some recent flooding on the restaurant property. The flooding may entail mitigation work involving shutting down the restaurant for some period of time. Because of the flooding issues, Henri and Lila now want to keep as much cash in their pocket as possible to pay current expenses. What are the couples best mortgage options if they can put down $57,000 on their new home? The home price agreed upon is $289,900 and this is the appraised price as well.

Checklist:

Calculate the LTV for this home if they were to use a conventional mortgage and explain the significance of your findings.

Compare the mortgage options covered in the weekly reading and recommend a mortgage option that would fit Henri and Lilas needs based on the scant information you have.

Explain the pros and cons of selecting whatever mortgage you recommend to them.