1.Kanye and his wife, Kim, both work and have a combined gross income of $165,000 peryear.They estimate the property taxes on their condo will be $2,100 and insurance would be about $1,500 per year.Kim has a car payment of $200 per month and they are both still paying off student loans for a combined total of $600 per month.

a.Find out how much of a monthly mortgage Kanye and Kim can afford.See your notes for the total expense ratio calculation.

b.Suppose the couple can get a 30 year loan with a rate of 3.5%, how large of a mortgage could they afford based on the payment you found in part a?