You are ready to buy a house and have $80,000 for a down payment and closing costs. Closing costs are estimated to be 2.5% of the loan value. You have an annual salary of $155,000. The bank is willing to allow your monthly mortgage payment to be equal to 28% of your monthly income. The APR on the loan is 6.25% per year with monthly compounding for a 30-year fixed-rate loan.

1. How much money will the bank loan you?

2. How much can you offer for the house?

3.How does your answer change if rates fall to 5.5%?

4.Construct a loan amortization table in Excel for the original mortgage (6.25%).