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By reading HELOC case:Michelle and Mike, I have to calculate HELOC.

I am not sure if I am doing it right and could you help me with HELOC calculations on the bottom?

Don't need to do benefit of proceeding with the HELOC.


HELOC Case: Michelle and Mike Role
You are Michelle and Mike @ You want to finish the basement in your home. You are very
excited about this project because it will provide two additional bedrooms, a bathroom and a new
family room for your growing family. The total cost of this project is $30,000.
You recently applied for a $30,000 installment loan at your bank, but were declined because of
the high amount of debt you currently have.
Here are the details of your current situation. Feel free to share this information with the
Financial Service Representative you are meeting today at CIBC.
Home Value: $400,000
Current Mortgage Balance with ABC Bank: $168,000
Outstanding Loans:
19, 99 .1 - interestrates
Monthly Payment
$ 5,400
$150. (minimum amount)
Car Loan 1 $16,000
Car Loan 2 $ 9,000
The Brick
$ 6,600
Income: Michelle $50,000 and Mike $40,000
Cash Flow Summary: $100 surplus each month.
You are hopeful today's meeting will result in an approval for you to receive the $30,000 as the
contractor has said he could begin the project next month.
In terms of cash flow, you can handle all your current payments, and could increase your loan
payments by another $100 each month.
A good friend recently mentioned to you that he received a loan from his bank that allowed him
to pay off all his other smaller loans, leaving him with a lower monthly payment! This doesn't
seem possible, and you're not sure you should ask the FSR about that type of loan because you
are afraid it would make you look foolish.
Good luck!
HELOC Case Michelle and Mike Role.docx/Client Communications


HELOC Case: FSR Role
You are a Financial Services Representative (FSR) with CIBC.
You are meeting today with Michelle and Mike. They are interested in speaking to you about a
loan to finish the basement in their home. They are not clients and you haven't met them before.
Gather the following information from them, and make a decision regarding whether they will
qualify for the loan they desire. Also be sure you address these areas:
a) Build rapport, and then ask "how can I help you today?"
b) Calculate whether they will qualify for a HELOC ( circle: YES or NO )
If yes, what is the HELOC maximum they could qualify for: $ 152100 (show calcs)
d) Calculate their monthly payment if they were to borrow enough from their HELOC to
fund the basement project as well as pay off all their debt (other than mortgage). (N=10)
e) Identify and communicate to Michelle and Mike the benefits of these actions. (list below)
Data to Collect:
Home Value:
400, 000
400, 000 - 168, 800
Current Mortgage Balance with ABC Bank:
Outstanding Loans:
Loan Type
Monthly Payment
$5 , 400
$ 150
320, 000
Car Loan 1
$ 16,000
$ 300
16 8 0 10
Car Loan 2
$ 200
152, 200
The Brick
$ 42, 400
$ 900
Michelle $50,000 and Mike $40,000
Cash Flow Summary: (surplus/deficit) $
72, 400
HELOC Calculations:
Benefits of proceeding with the HELOC:
HELOC Case FSR Role.docx/Client Communications

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