Critical Thinking Case 2 Evaluating a Mortgage Loan for the Bissets Aramis and Danielle Bisset, both in their mid-20s, have been married for 4 years and have two preschool age children. Aramis has an accounting degree and is employed as a cost accountant at an annual salary of $65,000. They're now renting a duplex but wish to buy a home in the suburbs of their rapidly developing city. They've decided they can afford a $415,000 house and hope to find one with the features they desire in a good neighborhood, The Insurance costs on such a home are expected to be $1,000 per year, taxes are expected to be $3,000 per year, and annual utility bills are estimated at $1,800 - an increase of $500 over those they pay in the duplex. The Bissets are considering financing their home with a fixed-rate 30-year, 6 percent mortgage. The lender charges 2 points on mortgages with 15 percent down and 3 points if less than 15 percent is put down the commercial bank that the Bissets will deal with requires a minimum of 10 percent down). Other closing costs are estimated at 5 percent of the home's purchase price. Because of their excellent credit record, the bank will probably be willing to let the Blosets' monthly mortgage payments (principal and interest portions) equal as much as 28 percent of their monthly gross income. Since getting married, the Bluetu have been saving for the purchase of a home and now have $40,000 in their savings account. 1. How much would the Bissets have to put down if the lender required a minimum 15 percent down payment? Round the answer to the nearest cent. $ Could they afford it? -Select- 2. Given that the Bissets want to put only $27,000 down, how much would total closing costs bo? Down payment should be taken into account. Round the answer to the nearest cent. Practice: Chapter 05 Making Automobile and Housing Decisions 1. How much would the Bissets have to put down if the lander required a minimum 15 percent down payment Round the answer to the nearest cent ady Tools $ Could they afford it? Tips Tips 2. Given that the Bissets want to put only 527,000 down, how much would total closing costs be? Down payment should be taken into account, Round the answer to the nearest cent. 5 Considering only principal and Interest, how much would their monthly mortgage payments be? Round the answer to the nearest cant 5 Would they quality for a loan using a 28 percent affordability ratio? 3. Using a $27,000 down payment on a $205,000 home, what would the Bissets' loan-to-value ratio be? Round to two decimal places Calculate the monthly mortgage payments on a PITI basis. Round the answer to the nearest cant $ 4. What recommendations would you make to the Bissets? Explain 2.40F 2/12/2 51'F
