Using the maximum ratios for a conventional mortgage, how big a monthly payment could the Sanchez family afford if their gross (before-tax) monthly income amounted to $5,000? (Hint: Monthly mortgage payments cannot exceed 25 to 30 percent of the borrower's monthly gross income and the borrower's total monthly installment loan payments (including the mortgage payment) cannot exceed 33 percent to 38 percent of monthly gross income.) $ Would it make any difference if they were already making monthly installment loan payments totaling $600 on two car loans? Maximum mortgage payment they could make would be $ .

Using the maximum ratios for a conventional mortgage, how big a monthly payment could the Sanchez family afford if their gross (before-tax) monthly income amounted to $5,000? (Hint: Monthly mortgage payments cannot exceed 25 to 30 percent of the borrower's monthly gross income and the borrower's total monthly installment loan payments (including the mortgage payment) cannot exceed 33 percent to 38 percent of monthly gross income.) $ Would it make any difference if they were already making monthly installment loan payments totaling $600 on two car loans? Maximum mortgage payment they could make would be $ .

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter5: Making Automobile And Housing Decisions

Section: Chapter Questions

Problem 4FPE

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using the maximum ratios for a conventional mortgage, how big a monthly payment could one afford if theor gross income is $4,000? Would it make a difference if he already had a car payment of $750?
Suppose a family has a gross annual income of $43,200. a. What is the maximum amount the family should spend each month on a mortgage payment? b. What is the maximum amount the family should spend each month for total credit obligations? c. If the family's monthly mortgage payment is 80%of the maximum they can afford, what is the maximum amount they should spend each month for all other debt?
Problem: Justin and Hayley are interested in a fixed-rate mortgage for $450,000. They are undecided whether to choose a 15- or 30-year mortgage. The current mortgage rate is 3.5% for the 15-year mortgage, and 3.85% for the 30-year mortgage. (a) What are the monthly principal and interest payments for EACH loan? Show your work. (b) What is the total amount of interest paid on EACH loan? Show your work. (c) Overall, how much more interest is paid by choosing the 30-year mortgage? Show your work.
Problem: Justin and Hayley are interested in a fixed-rate mortgage for $450,000. They are undecided whether to choose a 15- or 30-year mortgage. The current mortgage rate is 3.5% for the 15-year mortgage, and 3.85% for the 30-year mortgage. (a) What are the monthly principal and interest payments for EACH loan? (b) What is the total amount of interest paid on EACH loan? (c) Overall, how much more interest is paid by choosing the 30-year mortgage? S
You are applying for a conventional mortgage from the Americana Bank. Your monthly gross income is $3,500, and the bank uses the 28% housing expense ratio guideline. a. What is the highest PITI you can qualify for? Hint: Solve the housing expense ratio formula for PITI. (Remember, this is an application of the percentage formula, Portion = Rate x Base, where PITI is the portion, the expense ratio is the rate, and your monthly gross income is the base.) b. Based on your answer from part a, if you are applying for a 30-year, 9% mortgage, and the taxes and insurance portion of PITI is $175 per month, use Table 14-1 to calculate what size mortgage you qualify for. Hint: Subtract TI from PITI. Divide the PI by the appropriate table factor to determine how many $1,000s you qualify to borrow. c. Based on your answer from part b, if you are planning on a 20% down payment, what is the most expensive house you can afford? Hint: Use the percentage formula again. The purchase price of the house is…
Home equity lines. Kai and Ivy Harris have a home with an appraised value of $180,000 and a mortgage balance of only $90,000. Given that an S&L is willing to lend money at a loan-to-value ratio of 75 percent, how big a home equity credit line can Kai and Ivy obtain? How much, if any, of this line would qualify as tax-deductible interest if their house originally cost $200,000?
The annual income of a borrower is $74,000.00. What is the maximum dollar amount he can borrow to purchase a house if the bank requires that the borrower’s debt to income ratio not to exceed 36% of his gross monthly income. The borrower is making a monthly payment of $250.00 for an auto loan and the current mortgage rate is 6.97%. The borrower can afford a total of 20% for the down payment and a closing cost of $6,765.00.
2. That calculated monthly expense should include all housing costs (such as insurance, property taxes, etc), let’s estimate this means they would have around $950 a month for their mortgage payment and they have poor credit so qualify for a loan with an APR of 5.481%. What size 30 year home mortgage loan could they pay off with a monthly payment of $950?
Suppose you have just purchased your first home for $550,000. At the time of purchase you could only afford to commit to a down payment of $55,000. In order to make the loan, the lender requires you to obtain private mortgage insurance (PMI) on their behalf. Suppose over time you paid down the principal of the loan to $535,000 and at that point in time you can no longer make any mortgage payments (i.e., you default on the loan). If the lender were to foreclose on your property and sell it for $508,000 (net proceeds), what would the lender's loss of principal be taking into consideration the protection of mortgage insurance? (Let's assume that the PMI in this case covers the top 25% of the loan.)
A couple who wants to purchase a home with a price of $340,000 has $100,000 for a down payment. If they can get a 25-year mortgage at 6% per year on the unpaid balance, find each of the following. (a) What will be their monthly payments? (b) What is the total amount they will pay before they own the house outright? (c) How much interest will they pay over the life of the loan? (a) Their monthly payments would be approximately $ (Do not round until the final answer. Then round to the nearest hundredth as needed.) (b) They will pay a total amount of approximately $ before they own the house outright. (Use the answer from part a to find this answer. Round to the nearest hundredth as needed.) (c) The total interest is approximately $ (Use the answer from part b to find this answer. Round to the nearest hundredth as needed.)
3. A loan used for buying a home is called a mortgage. The Fortunato family is borrowing $430,000 to buy a home. They are taking out a 30-year mortgage at a rate of 3.55%. What is the monthly payment? 3. b. What is the total amount paid?
A couple who wants to purchase a home with a price of $290,000 has $50,000 for a down payment. If they can get a 20-year mortgage at 7% per year on the unpaid balance, find each of the following. (a) What will be their monthly payments? (b) What is the total amount they will pay before they own the house outright? (c) How much interest will they pay over the life of the loan? (a) Their monthly payments would be approximately $. (Do not round until the final answer. Then round to the nearest hundredth as needed.)