Question
Your brother is applying for mortgage. Your brother earns $120,000 per year. He is going to purchase a house which costs $900,000. The property taxes
Your brother is applying for mortgage. Your brother earns $120,000 per year. He is going to purchase a house which costs $900,000. The property taxes will be $450 per month. The heating costs are $200 per month. You brother has a car loan and the payments are $420 per month and he a student loan payment of $250 per month.
The lender is prepared to lend your brother money at a rate of 5.8% compounded semi-annually. The term will be 5 years and the amortization period will be 25 years. Your brother will make monthly payments on his mortgage. The lender's requirements are that the GDS ratio cannot be greater than 0.39 and TDS ratio cannot be greater than 0.44.
The lender is required to stress all new mortgages.
1. What is the maximum size of the mortgage that the lender can give your brother?
2. Assuming your brother is granted the maximum mortgage amount what will be the amount of your brother's monthly mortgage payments?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Okay lets calculate this stepbystep 1 What is the maximum size of the mortgage that the ...Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started