i need help on step 1 and step 4

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 38% 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. - $ 301.00 . $ 650.00 Affordable monthly mortgage payment $ 3,451.00 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 $1,000 1$ 5.37 $ 1,000.00 Affordable mortgage amount Step 5 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). $ 0.90 Affordable home purchase price $ 714,049.00 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 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 cafe's 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 $285,000 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 Ross's 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 $650 per month for estimated combined property taxes and insurance 5% interest rate for 30 years Refer to Exhibit 9-9 for current mortgage rates Current Financial Situation Assets (Jamie Lee and Ross combined): Checking account Savings account Emergency fund savings account IRA balance Car (Jamie Lee) Car (Ross) Liabilities (Combined): Student loan balance Credit card balance Car loans $57000 $39,900 $82,000 $69.700 Income: $5,500 Gross income (Jamie Lee) $56,400 Net income after taxes (Jamie Lee) $20,300 Gross income (Ross) $25,200 Net income after taxes (Ross) $13,200 Monthly Expenses (Combined): $21,200 Utilities Food $0 Gas/Maintenance $0 Credit card payment $9,200 Car loan payment Entertainment $105 $385 $335 $0 $301 $360 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% $4.22 $4.74 $5.55 $6.91 3.5 4,49 5,07 5.80 7.15 4.0 4.77 5.28 6.06 7.40 45 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 6.99 739 8.06 9.27 80 7.34 7.72 8.36 9.56 8.5 7.69 8.05 8.68 9.85 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 38% 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. - $ 301.00 . $ 650.00 Affordable monthly mortgage payment $ 3,451.00 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 $1,000 1$ 5.37 $ 1,000.00 Affordable mortgage amount Step 5 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). $ 0.90 Affordable home purchase price $ 714,049.00 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 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 cafe's 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 $285,000 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 Ross's 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 $650 per month for estimated combined property taxes and insurance 5% interest rate for 30 years Refer to Exhibit 9-9 for current mortgage rates Current Financial Situation Assets (Jamie Lee and Ross combined): Checking account Savings account Emergency fund savings account IRA balance Car (Jamie Lee) Car (Ross) Liabilities (Combined): Student loan balance Credit card balance Car loans $57000 $39,900 $82,000 $69.700 Income: $5,500 Gross income (Jamie Lee) $56,400 Net income after taxes (Jamie Lee) $20,300 Gross income (Ross) $25,200 Net income after taxes (Ross) $13,200 Monthly Expenses (Combined): $21,200 Utilities Food $0 Gas/Maintenance $0 Credit card payment $9,200 Car loan payment Entertainment $105 $385 $335 $0 $301 $360 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% $4.22 $4.74 $5.55 $6.91 3.5 4,49 5,07 5.80 7.15 4.0 4.77 5.28 6.06 7.40 45 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 6.99 739 8.06 9.27 80 7.34 7.72 8.36 9.56 8.5 7.69 8.05 8.68 9.85