Can Josh and Mia Afford This Home Using the Installment Debt Loan Criterion2 Next week, your friends Josh and Mia 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 Josh and Mia also collected the following information: 1. Their financial records report a combined gross before-tax annual income of $145,000 and current (pre-mortgage Installment loan, credit card, and car loan debt of $2,115 per month . Their property taxes and homeowner's Insurance policy are expected to cost $1,838 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 $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 3 A table of monthly payments (necessary to repay a $10,000 loan) follows Loan Maturity Interest Rate (%) 15 Year 20 Year 25 Year 30 Year 10 Year 106,0655 5.0 79.0794 65.9956 58.4590 5.5 53.6822 56.7789 81.7083 68.7887 61.4087 108.5263 111.0205 6.0 84.3857 71.6431 64.4301 59.9551 6.5 113.5480 37 1107 74.5573 67,5207 63 2063 70 39.3820 77.5299 70.6779 116.1035 118.7018 66.5302 69.9215 2.5 92.7012 80.5593 73.8991 80 95.5652 83.6440 77.1816 73.3765 121.3276 123.9857 3.5 36.7823 BO.5227 76.8913 9.0 126.6758 98.4740 1014267 104.4225 89.9726 83.9196 80.4623 9.5 129.3976 93.2131 37.3697 84.0854 05. Assignment - Making Automobile and Housing Dedsions 9.5 129.3976 104.4225 93.2131 87.3697 86.0854 10.0 132.1507 107.4605 96.5022 90.8701 87.7572 Note: Unless labeled differently, all of the following values represent dolor amounts. Also, some values calculated or used in the upper section of the table may also be used in the lower section. Remember to round each dollar amount to the nearest whole dollar Home Affordability Worksheet Based on Installment Payments and Monthly Income 1. Annual income High Value Low Value Amount 2. Monthly Income M 38% 3396 3. Existing monthly installment payments 4. Existing monthly installment payments as percentage of monthly income (%) 5. Lender's monthly installment loan affordability ratio 6. Maximum amount of total affordable Installment debt 7. Maximum monthly mortgage payment (PITI) affordable based on installment loan ratio 3. Estimated monthly property tax and insurance payment 9. Maximum monthly loan payment (P and Tonly) 10. Expected interest rate 11. Planned loan maturity (years) 12. Mortgage payment factor per $10,000 (from the Loon Maturity table) 13. Maximum loan based on mortgage payment factor (from the Loan Matunity table) 14. Required (20%) down payment 15. Maximum home price based on installment loan ratio 7.5% 15 Given these results, which statement regarding Josh and Mia's mortgage qualification process and their purchase of their $245,000 target home is true? O Josh and Mia do not quality to purchase their $245,000 target home according to the Installment Debt Affordability Worksheet criterion Josh and Mla quality to purchase their $245,000 target home according to the Installment Debt Affordability Worksheet criterion Can Josh and Mia Afford This Home Using the Installment Debt Loan Criterion2 Next week, your friends Josh and Mia 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 Josh and Mia also collected the following information: 1. Their financial records report a combined gross before-tax annual income of $145,000 and current (pre-mortgage Installment loan, credit card, and car loan debt of $2,115 per month . Their property taxes and homeowner's Insurance policy are expected to cost $1,838 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 $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 3 A table of monthly payments (necessary to repay a $10,000 loan) follows Loan Maturity Interest Rate (%) 15 Year 20 Year 25 Year 30 Year 10 Year 106,0655 5.0 79.0794 65.9956 58.4590 5.5 53.6822 56.7789 81.7083 68.7887 61.4087 108.5263 111.0205 6.0 84.3857 71.6431 64.4301 59.9551 6.5 113.5480 37 1107 74.5573 67,5207 63 2063 70 39.3820 77.5299 70.6779 116.1035 118.7018 66.5302 69.9215 2.5 92.7012 80.5593 73.8991 80 95.5652 83.6440 77.1816 73.3765 121.3276 123.9857 3.5 36.7823 BO.5227 76.8913 9.0 126.6758 98.4740 1014267 104.4225 89.9726 83.9196 80.4623 9.5 129.3976 93.2131 37.3697 84.0854 05. Assignment - Making Automobile and Housing Dedsions 9.5 129.3976 104.4225 93.2131 87.3697 86.0854 10.0 132.1507 107.4605 96.5022 90.8701 87.7572 Note: Unless labeled differently, all of the following values represent dolor amounts. Also, some values calculated or used in the upper section of the table may also be used in the lower section. Remember to round each dollar amount to the nearest whole dollar Home Affordability Worksheet Based on Installment Payments and Monthly Income 1. Annual income High Value Low Value Amount 2. Monthly Income M 38% 3396 3. Existing monthly installment payments 4. Existing monthly installment payments as percentage of monthly income (%) 5. Lender's monthly installment loan affordability ratio 6. Maximum amount of total affordable Installment debt 7. Maximum monthly mortgage payment (PITI) affordable based on installment loan ratio 3. Estimated monthly property tax and insurance payment 9. Maximum monthly loan payment (P and Tonly) 10. Expected interest rate 11. Planned loan maturity (years) 12. Mortgage payment factor per $10,000 (from the Loon Maturity table) 13. Maximum loan based on mortgage payment factor (from the Loan Matunity table) 14. Required (20%) down payment 15. Maximum home price based on installment loan ratio 7.5% 15 Given these results, which statement regarding Josh and Mia's mortgage qualification process and their purchase of their $245,000 target home is true? O Josh and Mia do not quality to purchase their $245,000 target home according to the Installment Debt Affordability Worksheet criterion Josh and Mla quality to purchase their $245,000 target home according to the Installment Debt Affordability Worksheet criterion