Alan & Amy are a youngish couple in their late twenties and early thirties.  They both have good jobs and saved well for the home of their dreams for a number of years. They decided to accept a transfer to Las Vegas this year so as to start a family. They decided to look for their dream home in late 2011 and early 2012 in the middle of winter when home buying competition is typically at its least.

Plans were accelerated when Amy discovered she was pregnant in March and their dream home search began in earnest. They were looking for a home for the next twenty plus years with space to raise a large family in.
While this property may drop a further 5% – 10% in value over the next year or two their long term outlook made this more than acceptable to them.

Financially, their monthly situation looks something like this:
Purchase Price $249,100
20% down $  48,820
Loan $200,280

They have a 30 year fixed rate mortgage @ 5% with a monthly PITI of $1,349.06. After closing costs of $6,695 their adjusted purchase price was $255,795.
A rental CMA of similar properties in the area puts monthly rent at $2120.

So if they are ever transferred or end up with an even larger family they will have a Capital Gain focused investment property with a positive income of $770 per month!  Not bad for their first home!

(For privacy purposes, client’s names have been changed, but all case study examples are real people with real property plans and reference real transactions.)