You have just graduated from MSU, and have landed a job with a starting salary of $75,000 per year. You have decided to buy a house, and you have $10,000 saved up from your part-time job at Qdoba. The Eighth National Bank of DeWitt is offering to give you a 30-year mortgage at 8.7% annual interest with monthly payments, but they will not give you a loan that will involve monthly payments of more than 25% of your income. Assuming you will borrow as much as you can from this bank, and assuming closing costs of 4% of the amount borrowed, what is the highest price you will be able to pay for the house?

Problem 5