Next week, your friends Caroline and Antonio want to apply to the Third Universal Bank for a mortgage loan. They are considering the purchase of a home that is expected to cost $125,000. Given your knowledge of personal finance, they've asked for your help in completing the Home Affordability Worksheet that follows. To assist in the preparation of the worksheet, Caroline and Antonio also collected the following information: - Their financial records report a combined gross before-tax annual income of $85,000 and current (premortgage) installment loan, credit card, and car loan debt of $1,240 per month. - Their property taxes and homeowner's insurance policy are expected to cost $1,250 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 $32,500 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% Use either your financial calculator or the maximum affordable mortgage loan formula to complete the following home affordability worksheet. (Note: When completing the form, round each dollar amount to the nearest whole dollar. Unless labeled differentiy, all of the following values represent dollar amounts. Also, some values calculated or used in the upper section of the table may also be used in the lower section.) MAXIMUMAFFORDABLE MORTGAGE LOAN FORMULA Maximum Affordable Mortgage Loan =(1(1+12i)(12N)1)MazimumMonthlyLaanPayment Given these results, which statement regarding Caroline and Antonio's mortgage qualification process and the purchase of their $125,000 target home is true? Caroline and Antonio qualify to purchase their $125,000 target home according to the Monthly Income Affordability Worksheet criterion. Caroline and Antonio do not qualify to purchase their $125,000 target home according to the Monthly Income Affordability Worksheet criterion. Next week, your friends Caroline and Antonio want to apply to the Third Universal Bank for a mortgage loan. They are considering the purchase of a home that is expected to cost $125,000. Given your knowledge of personal finance, they've asked for your help in completing the Home Affordability Worksheet that follows. To assist in the preparation of the worksheet, Caroline and Antonio also collected the following information: - Their financial records report a combined gross before-tax annual income of $85,000 and current (premortgage) installment loan, credit card, and car loan debt of $1,240 per month. - Their property taxes and homeowner's insurance policy are expected to cost $1,250 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 $32,500 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% Use either your financial calculator or the maximum affordable mortgage loan formula to complete the following home affordability worksheet. (Note: When completing the form, round each dollar amount to the nearest whole dollar. Unless labeled differentiy, all of the following values represent dollar amounts. Also, some values calculated or used in the upper section of the table may also be used in the lower section.) MAXIMUMAFFORDABLE MORTGAGE LOAN FORMULA Maximum Affordable Mortgage Loan =(1(1+12i)(12N)1)MazimumMonthlyLaanPayment Given these results, which statement regarding Caroline and Antonio's mortgage qualification process and the purchase of their $125,000 target home is true? Caroline and Antonio qualify to purchase their $125,000 target home according to the Monthly Income Affordability Worksheet criterion. Caroline and Antonio do not qualify to purchase their $125,000 target home according to the Monthly Income Affordability Worksheet criterion
