Can Abigail and Alexander Afford This Home Using the Installment Debt Loan Criterion?

Next week, your friends Abigail and Alexander want to apply to the Third Universal Bank for a mortgage loan. They are considering the purchase of a

home that is expected to cost $$245,000.$ Given your knowledge of personal finance, they've asked for your help in completing the Home Affordability

Worksheet that follows. $($Note: When completing the form, round each dollar amount to the nearest whole dollar.$)$

To assist in the preparation of the worksheet, Abigail and Alexander also collected the following information:

Their financial records report a combined gross before$-$tax annual income of $$85,000$ and current $($pre$-$mortgage$)$ installment loan,

credit card, and car loan debt of $$1,240$ per month.

Their property taxes and homeowner's insurance policy are expected to cost $$3,063$ per year.

Their best estimate of the interest rate on their mortgage is $7\mathrm{.}5\%,$ and they are interested in obtaining a $15-$year loan.

They have accumulated savings of $$56,500$ that can be used to satisfy the home's down payment and closing costs.

The lender requires a minimum $20\%$ down payment, and installment loan affordability ratios that range from a minimum of $33\%$ to a

maximum of $38\%.$

A table of monthly payments $($necessary to repay a $$10,000$ loan$)$ follows Loan Maturity

Interest Rate $(\%)10$ Year $15$ Year $20$ Year $25$ Year $30$ Year

$5\mathrm{.}0106\mathrm{.}065579\mathrm{.}079465\mathrm{.}995658\mathrm{.}459053\mathrm{.}6822$

$5\mathrm{.}5108\mathrm{.}526381\mathrm{.}708368\mathrm{.}788761\mathrm{.}408756\mathrm{.}7789$

$6\mathrm{.}0111\mathrm{.}020584\mathrm{.}385771\mathrm{.}643164\mathrm{.}430159\mathrm{.}9551$

$6\mathrm{.}5113\mathrm{.}548087\mathrm{.}110774\mathrm{.}557367\mathrm{.}520763\mathrm{.}2068$

$7\mathrm{.}0116\mathrm{.}108589\mathrm{.}882877\mathrm{.}529970\mathrm{.}677966\mathrm{.}5302$

$7\mathrm{.}5118\mathrm{.}701892\mathrm{.}701280\mathrm{.}559373\mathrm{.}899169\mathrm{.}9215$

$8\mathrm{.}0121\mathrm{.}327695\mathrm{.}565283\mathrm{.}644077\mathrm{.}181673\mathrm{.}3765$

$8\mathrm{.}5123\mathrm{.}985798\mathrm{.}474086\mathrm{.}782380\mathrm{.}522776\mathrm{.}8913$

$9\mathrm{.}0126\mathrm{.}6758101\mathrm{.}426789\mathrm{.}972683\mathrm{.}919680\mathrm{.}4623$

$9\mathrm{.}5129\mathrm{.}3976104\mathrm{.}422593\mathrm{.}213187\mathrm{.}369784\mathrm{.}0854$

$10\mathrm{.}0132\mathrm{.}1507107\mathrm{.}460596\mathrm{.}502290\mathrm{.}870187\mathrm{.}757$