Estimate the affordable monthly mortgage payment, the affordable mortgage amount, and the affordable home purchase price for the following situation. Use Exhibit 7-6. Exhibit 7-Z (Round your intermediate and final answers to the nearest whole dollar.) Monthly gross income Other debt (monthly payment) 30-year loan at Down payment to be made (percent of purchase price) Monthly estimate for property taxes and insurance $ 3,475 $ 235 6 percent 15 percent $ 210 Affordable monthly mortgage payment Affordable mortgage amount Affordable home purchase Exhibit 7-6 Housing Affordability and Mortgage Qualification Amount Example A Examples $48.000 - 12 $48,000 - 12 $ 4,000 x0.38 $ 1,520 $ 4,000 X033 $ 1,320 Step 1: Determine your monthly gross income (annual income divided by 12) Step 2: With a down payment of ot least 5 percent, lenders use 33 percent of monthly gross income as a guideline for PIT (principal, interest, taxes, and insurance) and 38 percent of monthly gross income as a guideline for PITI plus other debt payments, Step 3: Subtract other debt payments (0.9. payments on an auto loan) and an estimate of the monthly costs of property taxes and homeowner's insurance (c) Affordable monthly mortgage payment Step 4: Divide this amount by the monthly mortgage payment per $1,000 based on current mortgage rates-an 5 percent, 30-year loan, for example (see Exhibit 7-7) and multiply by $1,000 -380 -300 -300 840 $ 1.020 +$ 5.37 X$ 1,000 + $ 5.37 x $1,000 $156,425 $189,944 (b) Affordable mortgage amount Step 5: Divide your affordable mortgage amount by 1 minus the fractional portion of your down payment (e 9.1 -0.1 with a 10 percent down payment) (c) Affordable home purchase price -0.9 +0.9 5173,805 S211,049 NOTE The two ratios fending institutions use Step 2) and other loan requirements may vary based on a variety of factors, including the type of mortgage. the amount of the down payment your income level, credit score, and current interest rates. For example, with a down payment of 10 percent or more and a credit score exceeding 720, the ratios might increase to 40/45 percent in this exhibit Term Rate 30 Years 25 Years 20 Years 15 Years 30% $4.22 Exhibit 7-7 Mortgage Payment Factors (principal and interest factors per $1,000 of loan amount) $4,74 501 35 4.49 $5.55 5.80 6.06 $6.91 7.15 7.40 7.65 4.0 4.77 5.28 4.5 5.07 5.56 6.33 6.60 5.0 5.37 5.85 7.91 5.68 6.14 688 8.17 5.5 6.0 6,00 6.44 7.16 8.44 6.5 6.32 7.46 8.71 7.0 6.65 6.75 7.07 7.39 7.75 8.99 7.5 6.99 8.06 9.27 80 7.34 7.72 8.36 9.56
