Cashflow Statement

David and Jennifer Lee 01/01/2018-12/31/2018

Inflow
Salary-David	$63,000
Salary-Jennifer	74,000
Interest and dividend	5,200
Total inflow		$142,200
Outflow
Savings and investments
401k-David	$6,000
403b-Jennifer	7,200
Total savings and investments	$13,200
Expenses
Rent	26,400
Renters insurance	800
Auto insurance	5,000
Preschool	14,400
Toys	800
Health insurance	1,200
Life insurance	1,900
Telephone	1,200
Grocery	6,000
Utilities	1,800
Transportation (gas, oil, repairs)	4,500
Car loan-Jennifer	6,400
Car loan-David	9,000
Clothing Student loan	3,000 5,100
Travel and entertainment	2,600
Credit card debt	1,300
State income tax	16,000
Federal income tax	7,000
FICA tax	9,600
Total expenses	$124,000
Total outflow		$137,200
Surplus		$5,000

a. Calculate maximum monthly housing expenses and maximum debt Jennifer and David can carry based on 42% back-end ratio.

b. Calculate maximum monthly housing expenses based on 28% front-end ratio.

c. Assume they will apply for 30-year fixed mortgage with 4.05% interest. Assume property tax is 1.1% of house price and Homeowners insurance is 0.4% of house price. Assume they have already saved $140,000 for home purchase. Assume loan origination fee is 0.8% of loan amount and other closing cost is $5,000. Figure out house purchase price and expenses breakdown