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 Lees cupcake caf is a success! It has been open for over a year now and has earned itself rave reviews in the local press and from its regular customers who just cannot get enough of her delicious varieties of cupcakes. One such customer, who stopped by on a whim in the cafs first week of business, is Ross. After a whirlwind 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 small for the soon-to-be newlyweds, so Jamie Lee and Ross have purchased a brand new three-bedroom, 2 bath home in a quiet neighborhood for $287,000.

Use the provided information and the table below to calculate the affordable mortgage amount that would be suggested by a lending institution based on Jamie Lee and Rosss income. You will need to make note of the purchase price (above) of their home for future questions.

Use the following for Jamie Lee and Ross's calculations:

• 10% down payment
• $750 per month for estimated combined property taxes and insurance
• 4% interest rate for 30 years
• Refer to Exhibit 9-9 for current mortgage rates

Current Financial Situation

Assets (Jamie Lee and Ross combined):			Income:
Checking account	$5,700		Gross income (Jamie Lee)	$59,000
Savings account	$56,600		Net income after taxes (Jamie Lee)	$41,300
Emergency fund savings account	$20,500		Gross income (Ross)	$84,000
IRA balance	$25,400		Net income after taxes (Ross)	$71,400
Car (Jamie Lee)	$13,400		Monthly Expenses (Combined):
Car (Ross)	$21,400		Utilities	$115
Liabilities (Combined):			Food	$395
Student loan balance	$0		Gas/Maintenance	$345
Credit card balance	$0		Credit card payment	$0
Car loans	$9,400		Car loan payment	$303
			Entertainment	$370

Term Rate 30 Years 25 Years 20 Years 15 Years EXHIBIT 9-9 Mortgage payment factors (principal and interest factors per $1,000 of loan amount) 3.0% $4.74 $6.91 $4.22 4.49 3.5 5.01 $5.55 5.80 6.06 7.15 4.0 4.77 5.28 7.40 4.5 5.07 5.56 6.33 7.65 5.0 5.37 5.85 6.60 7.91 5.5 5.68 6.14 6.88 8.17 6.0 6.00 6.44 7.16 8.43 6.5 6.32 6.67 7.45 8.71 7.0 6.65 7.06 7.75 8.98 7.5 6.99 7.39 8.06 9.27 8.0 7.34 7.72 8.36 9.56 8.5 7.69 8.05 8.68 9.85