You qualify for a home loan of $350,000 at 7% interest with a 30-year term. Payments on the loan are made monthly. You have savings of $42,000 and would like to pay this amount as a down payment.

1.How much "home" can you afford?

2.Assuming you make the $42,000 down payment and take the loan of $350,000, what is the initial loan-to-value ratio on this home loan?

3.Assume there is a financial meltdown and the value of the home falls by 15% in the first year. After 12 months, your loan balance is $346,445. What is the loan-to-value ratio after one year?