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Over the past 4 0 years, interest rates have varied widely. The rate for a 3 0 - year mortgage reached a high of 1

Over the past 40 years, interest rates have varied widely. The rate for a 30-year mortgage reached a high of 14.75% in July 1984, and it reached 3.31% in November 2012. A significant impact of lower interest rates on society is that they enable more people to afford the purchase of a home. In the following exercise, we consider the purchase of a home that sells for $125,000. Assume that we can make a down payment of $25,000, so we need to borrow $100,000. We assume that our annual income is $53,000 and that we have no other debt.
If we can afford to pay a monthly amount of $986.67, determine how much we can borrow if the term is 30 years and the interest rate is at the historic high of 14.75%.(Round your answer to the nearest dollar.)
$
79282
Incorrect: Your answer is incorrect.
Can we afford the home?
Yes
No
Correct: Your answer is correct.
If we can afford to pay a monthly amount of $986.67, determine how much we can borrow if the term is 30 years and the interest rate is 3.31%.(Round your answer to the nearest dollar.)
$
Can we afford the home now?
Yes
No
Correct: Your answer is correct.
How much more can you afford to borrow when the 30-year mortgage rate is at 3.31% compared to 14.75%?
$
121,605.80
Incorrect: Your answer is incorrect.

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