Next week, your friends Lorenzo and Neha 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 $$185,000.$ 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, Lorenzo and Neha also collected the following information:

Their financial records report a combined gross before$-$tax annual income of $$125,000$ and current $($pre$-$mortgage$)$ installment loan,

credit card, and car loan debt of $$1,823$ per month.

Their property taxes and homeowner's insurance policy are expected to cost $$3,238$ per year.

Their best estimate of the interest rate on their mortgage is $7\mathrm{.}5\%,$ and they are interested in obtaining a $15-$year loan.

They have accumulated savings of $$44,500$ 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

where

$i=$ interest rate

$N=$ number $of$ years