Home costs 185,000

Their financial records report a combined gross, before tax, annual income of $85,000, and current (pre-mortgage) installment loan, credit card and car loan, debt of $1,240 per month. Their best estimate of the interest rate on the new mortgage is 7.5%, and they are interested in obtaining a 15-year loan. They have accumulated savings of $44,500 that can be used to satisfy the home's down payment and closing costs. The lender requires a minimum 20% down payment. Note: When completing the form, round each dollar amount to the nearest whole dollar. Unless labeled differently, all of the values in the worksheet represent dollar amounts. Also, this problem contains additional information that may not be necessary to generate your solutions to the questions. Home Affordability Worksheet Based on the Front-end ratio High Value Low Value Amount 1. Annual income 2. Lender's front-end income affordability ratio 29% 25% 3. Maximum allowable annual housing (PITI) payment 4. Maximum allowable monthly housing (PITI) payment Based on the Back-end ratio 5. Monthly income 6. Existing monthly installment payments % 41% 33% 7. Existing monthly installment payments as percentage of monthly income 8. Lender's monthly installment loan affordability ratio 9. Maximum amount of total monthly affordable installment debt 10. Maximum monthly mortgage payment (PITI), given existing debt payments