Next week, your friends Jacques and Kyoko want to apply to the Fifth State 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, Jacques and Kyoko also collected the following information: - Their financial records report a combined gross before-tax annual income of $105,000 and current (pre-mortgage) installment loan, credit card, and car loan debt of \$1,531 per month. - Their property taxes and homeowner's insurance policy are expected to cost \$1,563 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 installment loan affordability ratios that range from a minimum of 33% to a maximum of 38%. 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 differently, 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. Round your percentage answer to two decimal places.) MAXIMUM AFFORDABLE MORTGAGE LOAN FORMULA Maximum Affordable Mortgage Loan = 12iMaximumMonthlyLoanPayment(1(1+12i)(12N)1) Home Affordability Worksheet Based on Installment Payments and Monthly Income High Value Low Value Amount 1. Annual income 2. Monthly income 3. Existing monthly installment payments 4. Existing monthly installment payments as percentage of monthly income (\%) % 5. Lender's monthly installment loan affordability ratio 6. Maximum amount of total affordable installment debt 7. Maximum monthly mortgage payment (PITI) affordable based on installment loan ratio 8. Estimated monthly property tax and insurance payment 9. Maximum monthly loan payment ( P and I only) 10. Expected interest rate 7.5% 11. Planned loan maturity (years) 15 12. Maximum Ioan 13. Required ( 20% ) down payment 14. Maximum home price based on installment loan ratio Given these results, which statement regarding Jacques and Kyoko's mortgage qualification process and the purchase of their $125,000 target home is true? Jacques and Kyoko do not qualify to purchase their $125,000 target home according to the Installment Debt Affordability Worksheet criterion. Jacques and Kyoko qualify to purchase their $125,000 target home according to the Installment Debt Affordability Worksheet criterion