Next week, your friends Frances and Dmitri 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 $155,000. Given your knowledge of personal finance, theyve asked for your help in completing the Home Affordability Worksheet that follows.

To assist in the preparation of the worksheet, Frances and Dmitri also collected the following information.

Their financial records report a combined gross before-tax annual income of $105,000 and current (premortgage) installment loan, credit card, and car loan debt of $1,531 per month.

Their property taxes and homeowners insurance policy are expected to cost $2,325 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 homes down payment and closing costs.

The lender requires a minimum 20% down payment, and an affordability ratio that ranges from minimum of 25% to a maximum of 30%.