Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

This was all I was given. Please answer Estimate the affordable monthly mortgage payment, the affordable mortgage amount, and the affordable home purchase price for

image text in transcribed

image text in transcribedimage text in transcribed

This was all I was given. Please answer

Estimate the affordable monthly mortgage payment, the affordable mortgage amount, and the affordable home purchase price for the following situation. Use Exhibit 7-6, Exhibit 7-7. (Round your intermediate and final answers to the nearest whole dollar.) Monthly gross income Other debt (monthly payment) 25-year loan at Down payment to be made (percent of purchase price) Monthly estimate for property taxes and insurance $ 3,485 $ 245 7 percent 20 percent $ 190 Affordable monthly mortgage payment Affordable mortgage amount Affordable home purchase Exhibit 7-6 Housing Affordability and Mortgage Qualification Amount Example A Example B Step 1: Determine your monthly gross income (annual income divided by 12). $48,000 - 12 $48,000 = 12 Step 2: With a down payment of at least 5 percent, lenders use 33 percent of monthly gross income as a guideline for PITI (principal, interest, taxes, and insurance) and 38 percent of monthly gross income as a guideline for PITI plus other debt payments. $ 4,000 x 0.38 $ 1.520 $ 4,000 x 0.33 $ 1,320 Step 3: Subtract other debt payments (e.g., payments on an auto loan) and an estimate of the monthly costs of property taxes and homeowner's insurance. -380 -300 -300 (a) Affordable monthly mortgage payment $ 840 $ 1,020 Step 4: Divide this amount by the monthly mortgage payment per $1,000 based on current mortgage rates-an 8 percent, 30-year loan, for example (see Exhibit 7-7)- and multiply by $1,000 - $ 7.34 x $ 1.000 $ 7.34 x $1,000 (b) Affordable mortgage amount $114,441 $ 138,965 +0.9 +0.9 Step 5: Divide your affordable mortgage amount by 1 minus the fractional portion of your down payment (e.g., 1 - 0.1 with a 10 percent down payment). (c) Affordable home purchase price $127.157 $154,405 Term Rate 30 Years 20 Years 15 Years $4.22 $6.91 Exhibit 7-7 Mortgage Payment Factors (principal and interest factors per $1,000 of loan amount) 3.0% 3.5 25 Years $4.74 5.01 5.28 $5.55 5.80 4.49 7.15 4.0 4.77 6.06 7.40 4.5 5.07 5.56 6.33 7.65 5.0 5.37 5.85 7.91 6.60 6.88 5.5 5.68 6.14 8.17 6.0 6.00 6.44 7.16 8.44 6.5 6.32 6.75 7.46 8.71 7.0 6.65 7.07 7.75 8.99 7.5 6.99 7.39 8.06 9.27 8.0 7.34 7.72 8.36 9.56

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Teaching Public Budgeting And Finance

Authors: Meagan M. Jordan, Bruce D. McDonald III

1st Edition

1032146680, 978-1032146683

More Books

Students also viewed these Finance questions