Question

Hello,

Can you help with the below?

15.   Estimating a Monthly Mortgage Payment: Estimate the affordable monthly mortgage payment, the affordable mortgage amount, and the affordable home purchase price for the following situation:

Monthly gross income, $2,950
Down payment to be made, 15 percent of purchase price
Other debt (monthly payment), $160
Monthly estimate for property taxes and insurance, $210
25-year loan at 6.5 percent.

A: NOTE: This problem is based on example A (with other debts), Exhibit 7-7.

A: Affordable monthly mortgage payment,

A: Affordable mortgage amount,

A: Affordable home purchase,

Answer 1

Affordable monthly mortgage payment = 2580 (2950-160-210)

Affordable mortgage amount = 382105 (from the formula P= a/{[(1+r)^n]-1}/[r(1+r)^n] ....in this formula P is monthly payment (2580), A is loan amount (to be computed), R is periodic interst rate (6.5%/12) and N is total number of payment periods (300 months)

Affordable home purchase = Mortgage amount/0.85

382105/0.85 = 449535

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