Current Financial Situation

• Assets(Jamie Lee and Ross combined):
• Checking account, $4,300
• Savings account, $55,200
• Emergency fund savings account, $19,100
• IRA balance, $24,000
• Cars, $12,000 (Jamie Lee) and $20,000 (Ross)
• Liabilities(Jamie Lee and Ross combined):
• Student loan balance, $0
• Credit card balance, $0
• Car loans, $8,000
• Income:
• Jamie Lee, $45,000 gross income ($31,500 net income after taxes)
• Ross, $70,000 gross income ($59,000 net income after taxes)
• Monthly Expenses(Jamie Lee and Ross combined):
• Utilities, $160
• Food, $325
• Gas/Maintenance, $275
• Credit card payment, $0
• Car loan payment, $289
• Entertainment, $300

Questions

2.	Jamie Lee and Ross are estimating that they will be putting $40,000 from their savings account toward a down payment on their home purchase. Using the traditional financial guideline suggestion of "two and a half times your salary plus your down payment," calculate approximately how much Jamie Lee and Ross can spend on a house.
3.	calculate the affordable mortgage amount that would be suggested by a lending institution based on Jamie Lee and Ross's income. How does this amount compare with the traditional financial guideline found in Question 2? Use the following amounts for Jamie Lee and Ross's calculations: 10 percent down payment 28 percent for TIPI $500.00 per month for estimated combined property taxes and insurance 5 percent interest rate for 30 years (see Exhibit 7-7)