Question
You want to buy a house with a 30-year loan and you have $50,000 for a down payment and closing costs. Closing costs are estimated
You want to buy a house with a 30-year loan and you have $50,000 for a down payment and closing costs. Closing costs are estimated to be 4% of your housing price. Your salary in one month from today is $4,000, which will grow by 0.3 percent per month. The bank is willing to allow your monthly mortgage payment to be equal to 30% of your monthly income. The interest rate on the loan is 6% compounded monthly for the first 15 years and increases to 9% compounded monthly for the last 15 years. How much money will the bank loan you? How much can you offer for the house?
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