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Your annual gross ( pre - tax ) salary is $ 6 7 , 0 0 0 . You can obtain a 3 0 -
Your annual gross pretax salary is $ You can obtain a year fixed rate mortgage at annual percentage rate or APR of You have $ in other annual pretax income. You also have to pay $ per month on an auto loan and student loans. What is the most expensive home you can buy under these circumstances?
Assuming that you are making a down payment in order to avoid private mortgage insurance or PMI what is the price of the most expensive house you can afford to buy?
Hint: You already know the maximum amount you can borrow is $ which is equal of the price of the most expensive house you can afford. In reality, this is an overestimate of what you can afford because we neglected the effect of property taxes and homeowners insurance which can substantially increase your monthly mortgage payment.
a $
b $
c $
d $
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