Keep the Highest: /15 Attempts: 9. Can I afford this home? - Part 1 Can Aiden and Jesse Afford This Home Using the Monthly Income Loan Criterion? Next week, your friends Aiden and Jesse want to apply to the Fourth Global Bank for a mortgage loan. They are considering the purchase of home that is expected to cost $155,000. Given your knowledge of personal finance, they've asked for your help in completing the Home Affordability Worksheet that follows. (Note: When completing the form, round each dollar amount to the nearest whole dollar.) To assist in the preparation of the worksheet, Aiden and Jesse also collected the following information: Their financial records report a combined gross before-tax annual income of $145,000 and current (premortgage) installment loan, credit card, and car loan debt of $2,115 per month. Their property taxes and homeowner's insurance policy are expected to cost $1,550 per year Their best estimate of the interest rate on their mortgage is 7.5%, and they are interested in obtaining a 15-year loan. They have accumulated savings of $38,500 that can be used to satisfy the home's down payment and closing costs. The lender requires a minimum 20% down payment, and an affordability ratio that ranges from a minimum of 25% to a maximum of 30%. A table of monthly payments (necessary to repay a $10,000 loan) follows: Loan Maturity Interest Rate (%) 25 Years 30 Years 10 Years 15 Years 20 Years 5.0 106.0655 65.9956 53.6822 79.0794 58.4590 108.5263 56.7789 5.5 81.7083 68.7887 61.4087 64.4301 6.0 111.0205 84.3857 71.6431 59.9551 6.5 113.5480 87.1107 74.5573 67.5207 63.2068 77.5299 7.0 89.8828 70.6779 66.5302 116.1085 7.5 118.7018 92.7012 80.5593 73.8991 69.9215 83.6440 8.0 121.3276 95.5652 77.1816 73.3765 8.5 76.8913 123.9857 98.4740 86.7823 80.5227 9,0 126.6758 101.4267 89.9726 83.9196 80.4623 9.5 129.3976 104.4225 93.2131 87.3697 84.0854 10.0 132.1507 107.4605 96.5022 90.8701 87.7572 Note: Unless labeled differently, all of the following values represent dollar amounts. Also, some values calculated or used in the upper section of the able may also be used in the lower section.) Home Affordability Worksheet Based on Monthly Income High Value Low Value Amount 1. Annual income 145,000 2. Monthly income 3. Lender's monthly income affordability ratio 30% 25% 4. Maximum monthly mortgage payment (PITI) 5. Estimated monthly property tax and insurance payment 6. Maximum monthly loan payment (P and I only) 7. Expected interest rate 7.5% 8. Planned loan maturity (years) 15 8. Planned loan maturity (years) 15 9. Mortgage payment factor per $10,000 (from the Loan Maturity table) 10. Maximum loan based on monthly income 11. Funds Available for a Down Payment and Closing Costs 12. Required (20%) Down Payment 13. Maximum Purchase Price Based on Monthly Income Given these results, which statement regarding Aiden and Jesse's mortgage qualification process and their purchase of their $155,000 target home is true? OAiden and Jesse do not qualify to purchase their $155,000 target home according to the Monthly Income Affordability Worksheet criterion Aiden and Jesse qualify to purchase their $155,000 target home according to the Monthly Income Affordability Worksheet criterion Keep the Highest: /15 Attempts: 9. Can I afford this home? - Part 1 Can Aiden and Jesse Afford This Home Using the Monthly Income Loan Criterion? Next week, your friends Aiden and Jesse want to apply to the Fourth Global Bank for a mortgage loan. They are considering the purchase of home that is expected to cost $155,000. Given your knowledge of personal finance, they've asked for your help in completing the Home Affordability Worksheet that follows. (Note: When completing the form, round each dollar amount to the nearest whole dollar.) To assist in the preparation of the worksheet, Aiden and Jesse also collected the following information: Their financial records report a combined gross before-tax annual income of $145,000 and current (premortgage) installment loan, credit card, and car loan debt of $2,115 per month. Their property taxes and homeowner's insurance policy are expected to cost $1,550 per year Their best estimate of the interest rate on their mortgage is 7.5%, and they are interested in obtaining a 15-year loan. They have accumulated savings of $38,500 that can be used to satisfy the home's down payment and closing costs. The lender requires a minimum 20% down payment, and an affordability ratio that ranges from a minimum of 25% to a maximum of 30%. A table of monthly payments (necessary to repay a $10,000 loan) follows: Loan Maturity Interest Rate (%) 25 Years 30 Years 10 Years 15 Years 20 Years 5.0 106.0655 65.9956 53.6822 79.0794 58.4590 108.5263 56.7789 5.5 81.7083 68.7887 61.4087 64.4301 6.0 111.0205 84.3857 71.6431 59.9551 6.5 113.5480 87.1107 74.5573 67.5207 63.2068 77.5299 7.0 89.8828 70.6779 66.5302 116.1085 7.5 118.7018 92.7012 80.5593 73.8991 69.9215 83.6440 8.0 121.3276 95.5652 77.1816 73.3765 8.5 76.8913 123.9857 98.4740 86.7823 80.5227 9,0 126.6758 101.4267 89.9726 83.9196 80.4623 9.5 129.3976 104.4225 93.2131 87.3697 84.0854 10.0 132.1507 107.4605 96.5022 90.8701 87.7572 Note: Unless labeled differently, all of the following values represent dollar amounts. Also, some values calculated or used in the upper section of the able may also be used in the lower section.) Home Affordability Worksheet Based on Monthly Income High Value Low Value Amount 1. Annual income 145,000 2. Monthly income 3. Lender's monthly income affordability ratio 30% 25% 4. Maximum monthly mortgage payment (PITI) 5. Estimated monthly property tax and insurance payment 6. Maximum monthly loan payment (P and I only) 7. Expected interest rate 7.5% 8. Planned loan maturity (years) 15 8. Planned loan maturity (years) 15 9. Mortgage payment factor per $10,000 (from the Loan Maturity table) 10. Maximum loan based on monthly income 11. Funds Available for a Down Payment and Closing Costs 12. Required (20%) Down Payment 13. Maximum Purchase Price Based on Monthly Income Given these results, which statement regarding Aiden and Jesse's mortgage qualification process and their purchase of their $155,000 target home is true? OAiden and Jesse do not qualify to purchase their $155,000 target home according to the Monthly Income Affordability Worksheet criterion Aiden and Jesse qualify to purchase their $155,000 target home according to the Monthly Income Affordability Worksheet criterion