Exhibit 9-9 shows 4% interest rate for 30 years = 4.77

Mainly need help with step 5 (solving for affortable mortgage amount)

Five years have passed and Jamie Lee, 34 , is considering taking the plunge-not only is she engaged to be married. but she is also deciding on whether to purchase a new home. Jamie Lee's cupcake cafe is a success! it has been open for over ayear now and has earned itself rave reviews in the local press and from its regular customers who just cannot get enough of her delicious varietles of cupcakes. One such customet who stopped by on a whim in the cafe's first week of business, is Ross. After a whillwind courtship. Ross, a self-employed web designer, proposed. and Jamie Lee agreed to be his wife. The bungalow that Jamie Lee has been renting for the past five years is too smali for the soon-to-be newlyweds, so Jamie Lee and Ross have purchased a brand new three-bedroom, 2.12 bath home in a quilet neighborhood for $290,000 Use the provided information and the table below to calculate the aiflordable mortgage amount that would be suggested by a lending institution based on Jamie Lee and Ross's income. You will need to make note or the purchase price fabove) of their home for future questions. Use the following for Jamie Lee and Ross's calculations: - 10% down payment - $500 per month for estimated combined property taxes and insurance - 4% interest rate for 30 years - Refer to Exhibit 9-9 for current mortgage rates Step 1 Determine your monthly gross income (annual gross income / 12) Step 2 With a down payment of at least 5%, lenders use 33% of monthly gross income as a guideline for PITI (principal, interest, taxes, and insurance) and 38% of monthly gross income as a guideline for PITI plus other debt payments. Enter 33% or 38% depending upon whether other debt payments are present. Step 3 Subtract other debt payments (such as payments on an auto loan), if applicable. Subtract estimated monthly costs of property taxes and homeowner's insurance. Affordable monthly mortgage payment Step 4 Divide this amount by the monthly mortgage payment per $1,000 based on the current mortgage rates (see Exhibit 9-9). For example, for a 10\%, 30 -year loan, the number would be \$8.78). Multiply by $1,000 Affordable mortgage amount Divide your affordable mortgage amount by 1 minus the fractional portion of your down payment (for example, 0.9 for a 10 percent down payment). Affordable home purchase price