worksheet5.3

Use Worksheet 5.3. Rachel and Alexander Harrison need to calculate the amount they can afford to spend on their first home. They have a combined annual income of $67,500 and have $37,000 available for a down payment and closing costs. The Harrisons estimate that homeowner's insurance and property taxes will be $300 per month. They expect the mortgage lender to use a 29 percent of monthly gross income) mortgage payment affordability ratio, to lend at an interest rate of 6 percent on a 30-year mortgage, and to require a 10 percent down payment. Based on this information, use the home affordability analysis form in Worksheet 5J to determine the highest priced home the Harrisons can afford. Assume that closing costs are one half of the down payment. Round the answer to the nearest dollar, $ HOME AFFORDABILITY ANALYSIS Name Date September 27, 2021 Item Description Amount 1 Amount of annual income $ 2 $ 0 3 4 $ 0 5 6 $ $ 0 7 B g Monthly income (Item 1 +12) Lender's affordability ratio (in decimal form) Mascimum monthly mortgage payment (Pm) (Item 2 x Item 3) Estimated monthly property tax and homeowner's insurance payment Maximum monthly loan payment (item 4 - Item 5) Approximate average interest rate on loan Planned loan maturity (years) Present value interest factor for an annuity. PVIFA(Item 7 0.01/12, Itern 8 x 12) Maximum loan based on monthly income (Item 6 x Item 9) Funds available for making a down payment and paying closing costs Funds available for making a down payment (Item 11.67) Maximum purchase price based on available monthly income (Item 10 + Item 12) Minimum acceptable down payment (in decimal form) Maximum purchase price based on down payment (Item 12 + Item 14) Maximum home purchase price (lower of Item 13 and Item 15) 10 $ 11 $ 12 $ 13 $ 14 15 s 0 16 S Note: This analysis assume that one-third of the lunes available for making the down payment and payindosing or to medesin while there in two-thin