12. Can I afford this home? - Part 2 Can Bob and Cho afford this home using the installment debt loan criterion? Next week, yout friends Bob and Cho want to appiy to the Fift State Bank for a mortgage laan. They are considering the purchase of a home that is expected to cost $245,000. Given your knowledge of personal finance, theyve asked for your heip in completing the Hame Affordability Worksheet that follows. To assist in the preparation of the worksheet, Bob and Cho also collected the following iniformation: - Their financial records report a combined gross before-tax annual income of $145,000 and current (ore-mortgage) instailiment loan, crecit card, and car loan debt of $2,115 per month. - Thair property taxes and nomeowner's insurance policy are expected to cost $3,675 per year, - Their best estimate of the interest rate on their mortgage is 7.5%, and they are interested in obtaiting a 15 -year loan. - They have accumulated savings of $56,500 that can be ded to satisfy the homels down payment and closing costs. - The lender requres a minimum. 20% down payment, and installiment foan affordabui ty ratios that renge from a minimum ef 33% to a maximam of 38%. Use either youir financiel calculator or the maximom aftordable mortgage lasin formula to contalete the following hame affordability worksheet. (Note: When cempletiog the form, round each doilar amount to the nearest whole dstiar. Uniess labelod differentry, all of the following values raparesent dollar amounts. Also, same values calculated or used in the upper section of the table may abo be used in the lower stection, flound your pententege angiver to two decimat ploces.) - Their best estimate of the interest rate on their mortgage is 7.5%, and they are interested in obtaining a 15 -year loan. - They have accumulated savings of $56,500 that con be used to satisfy the home's down payment and closing costs. - The lender requires a minimum 20% down payment, and inctallment loan affordability ratios that range from a minimum cf 33 os to a maximum of 38%. Use either your financial calcutator or the maximum affordable mortgage losn formula to complete the fosowing honte affordatitity workshed. (Note: When completing the form, roand each doliar amount to the nearest whole dollar. Uniess labeled differentiy, all of the following vatues rearesent dollar ambunts. Abs, some values calculated or used in the upper section of the table may also be used in the lower section. Round your percentage answer to two decimal plsces.) Iven these results, which statement regarding Bob and Cho's mortgage quasification process and the purchase of their $245,000 target home is true Bob and Cho qualify to purchase their $245,000 target home according to the Instaliment Debt Affordabulity Workaheet criterion. Bob and Cho do not qualify to purchase their $245,000 target nome according to the Instaliment Debt Affordablity Worksheet criterion
