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.) $ Can we afford the home?

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