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. 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

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. 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 $3,675 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 38% Use either the table of monthly payments (necessary to repay a $10,000 loan 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.) Monthly Payments Factors 30 Years Interest Rate(%) 5.0 53.6822 56.7789 5.5 Maximum Affordable Mortgage Loan Formula Loan Maturity 10 Years 15 Years 20 Years 25 Years 106,0655 79,0794 65.9956 58,4590 103.5263 31.7083 68.7867 61.4087 111.0205 84.3857 71.6431 64.4301 113.5480 87 1107 74.5573 67.5207 116.1085 89.8828 77.5299 70.6779 116.7018 92.2012 80.5593 73 899 6.0 6.5 59.955: 63.2068 7.0 66.5302 7.5 69.9215 5.5 108.5263 81.7083 68.7887 61.4087 56.7789 59.9551 6.0 111.0205 84.3857 71.6431 64.4301 6.5 113.5480 87.1107 74.5573 67.5207 63.2068 116.1085 89.8828 7.0 77.5299 70.6779 66.5302 75 72 R991 69 9215 118218 A 5592 92 2012 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 inconto (%) 5. Lender's monthly installment loan affordability ratio 6. Maximum amount of total affordable installment debt 7. Maximum monthly mortgage payment (PTI) affordable based on installment loan ratio 8. Estimated monthly property tax and insurance payment 9. Maximum monthly loan payment (P and 1 only) 10. Expected interest rate 11. Planned loan matunty (years) 12. Mortgage payment factor per $10,000 (from the Loan Maturity table) 13. Maximum loon based on mortgage payment factor (from the Loan Maturity table) 4. Required (20%) down payment 15. Maximum home price based on installment loan ratio | 4+1 7.59 15 Given these results, which statement regarding Shen and Valere's mortgage qualification process and the purchase of their $245,000 target home is true? Shen and Valerie do not quality to purchase their $245,000 target home according to the Installment Debt Affordability Worksheet criterion Shen and Valerie quality to purchase their $245,000 target home according to the Installment Debt Affordability Worksheet criterion

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