*The bottom table is the question. Need filled.
12. Can I afford this home? - Part 2 Can Josh and Mia Afford This Home Using the Installment Debt Loan Criterion? Next week, your friends Josh and Mia 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 $245,000. Given your knowledge of personal finance, they ve asked for your help in completing the Home Affordability Worksheet that follows. (Note: When completing the form, round each dollar amount to the nearest whole dallar) To assist in the preparation of the worksheet, Josh and Mis also collected the following information: . Their financial records report a combined gross before-tax annual income of $145,000 and current (pre-martpage) Instamment loan, credit card, and car loan debt of $2,115 per month Their property taxes and homeowner's insurance policy are expected to cost $1,838 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 $56,500 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 3 maximum of 38% A table of monthly payments (necessary to repay a $10,000 loan) follows. Loan Maturity 15 Year Interest Rate (%) 10 Year 20 Year 25 Year 30 Year 5.0 79.0794 65.9956 58.4590 106.0655 108.5263 53.6822 5.5 81.7083 68.7887 61.4087 56.7789 6.0 111.0205 84.3857 71.6431 64.4301 59.9551 6.5 113.5480 87.1107 74.5573 67.5207 63.2068 7.0 116.1085 89.8828 77.5299 70.6779 66.5302 7.5 118.7018 92.7012 80.5593 73.8991 69.9215 8.0 121.3276 95.5652 83.6440 77.1816 73.3765 98.4740 86.7823 80.5227 8.5 123.9857 76.8913 89.9726 83.9196 80.4623 9.0 126.6758 101.4267 104.4225 87.3697 93.2131 84.0854 9.5 129.3976 96.5022 90.8701 87.7572 107.4605 10.0 132.1507 un dollar amounts. Also, some values calculated or used in the upper section of to High Value Low Value Amount 30 34 Home Affordability Worksheet Based on Installment Payments and Monthly Income 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 et 7. Maximum monthly mortgage payment (PIT) affordable based on installment loan ratio 8. Estimated monthly property tax and insurance payment 9. Maximum montray loan payment and I only) 10. Expected interest rate 11. Planned loan maturity (years) 12 Mortgage payment factor per $10,000 (from the Laan Maturity table) 13. Maximum loan based on mortgage payment factor (from the Loans Maturity table) 14. Required (204) down payment 15. Maximum home price based on installment loan ratio 35 Given these results, which statement regarding Josh and Mia's mortgage qualification process and the chase of 45,000 target hom i true Josh and Mia do not quality to purchase their 1245,000 target home according to the Installment Det Attardebility Worksheet criterion Josh and Mia quality to purchase their $245,000 target home according to the installment et Affordability Worksheet criterton 12. Can I afford this home? - Part 2 Can Josh and Mia Afford This Home Using the Installment Debt Loan Criterion? Next week, your friends Josh and Mia 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 $245,000. Given your knowledge of personal finance, they've asked for your help in completing the Home Affordability Worksheet that follows. (Note: When completing the form, round each dollar amount to the nearest whole doltar.) To assist in the preparation of the worksheet, Josh and Mia also collected the following information: Their financial records report a combined gross before-tax annual income of $145,000 and current (pre-mortgage) installment loan, credit card, and car loan debt of $2,115 per month Their property taxes and homeowner's Insurance policy are expected to cost $1,838 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 $56,500 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 3 A table of monthly payments (necessary to repay a $10,000 loan) follows. Loan Maturity 15 Year 10 Year 20 Year 25 Year 30 Year Interest Rate (%) 5.0 106.0655 79.0794 65.9956 58.4590 5.5 108.5263 81.7083 68.7887 61.4087 53.6822 56.7789 59.9551 63.2068 6.0 84.3857 64.4301 111.0205 113.5480 71.6431 74.5573 6.5 67.5207 87.1107 89.8828 7.0 77.5299 66.5302 7.5 116.1085 118.7018 121.3276 92.7012 95.5652 70.6779 73.8991 72.1816 80.5227 80.5593 83.6440 86.7823 69.9215 73.3765 8.0 8.5 76.8913 9.0 123.9857 126.6758 129.3976 83.9196 80.4623 98.4740 101.4267 104.4225 107.4605 9.5 89.9726 93.2131 26.5022 87.3697 90.8701 84.0854 87.7572 10.0 132.1507 Note: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. Remember to round each dollar amount to the nearest whole dollar Amount High Value Low Value % 38% 33% Home Affordability Worksheet Based on Installment Payments and Monthly Income 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 11. Planned loan maturity (years) 12. Mortgage payment factor per $10,000 (from the Loan Maturity table) 13. Maximum loan based on mortgage payment factor (from the Loan Maturity table) 14. Required (20%) down payment 15. Maximum home price based on installment loan ratio 7.5% 15 Given these results, which statement regarding Josh and Mia's mortgage qualification process and their purchase of their $245,000 target home is true? Josh and Mia do not quality to purchase their $245,000 target home according to the Installment Debt Affordability Worksheet criterion Josh and Mia quality to purchase their $245,000 target home according to the installment Debt Affordability Worksheet criterion
