Can Alex and Becky afford this home using the monthly income loan criterion? Next week, your friends Alex and Becky want to apply to the Fifth State Bank for a mortgage loan. They are considering the purchase of a home that is expected to cost $125,000. Given your knowledge of personal finance, they've asked for your help in completing the Home Affordability Worksheet that follows. To assist in the preparation of the worksheet, Alex and Becky also collected the following information: Their financial records report a combined gross before-tax annual income of 585,000 and current (promortgago) Instalment loan, credit card, and car loan debt of $1,240 per month. . Their property taxes and homeowner's insurance policy are expected to cost $1,250 per year. 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 $32,500 that can be used to satisfy the home's down payment and closing costs. . The tender requires a minimum 20% down payment, and an affordability ratio that ranges from a minimum of 25 to a maximum of 30%. Use either your financial calculator or the maximum affordable mortgage loan formula to complete the following home affordability worksheet (Note: When completing the form, round each dollar amount to the nearest whole dollar. Unless labeled differently, all of the following a les represent doar ST Low Value Amount 30% 25 Assignment: Chapter 05 Making Automobile and Housing Decisions Home Affordability Worksheet Based on Monthly Income High Value 1. Annual income 2. Monthly income 3. Lender's monthly income affordability ratio 4. Maximum monthly mortgage payment (PITI) 5. Estimated monthly property tax and Insurance payment 6. Maximum monthly loan payment (P and I only) 7. Expected interest rate 8. Planned loan maturity (years) 9. Maximum loan based on monthly Income 10. Funds Available for a Down Payment and Closing Costs 11. Required (20%) Down Payment 12. Maximum Purchase Price Based on Monthly Income 7.5 15 Given these results, which statement regarding Alex and Becky's mortgage qualification process and the purchase of their $125,000 target home is true? Alex and Becky qualify to purchase their $125,000 target home according to the Monthly Income Affordability Worksheet criterion. Alex and Becky do not qualify to purchase their 5125,000 target home according to the Monthly Income Affordability Worksheet criterion
