Question

As housing prices in his area have recently dropped, Tarek is insistent that he should buy a home. Given his projected monthly income of $5,200 and other monthly debt repayment expenses of $200 for a car and estimated student loan payments of $520 per month (use this number rather than the number calculated for part (c)), what’s the maximum monthly principal and interest payment he can afford if insurance is $85 per month and property taxes on the home are an additional $200 per month (use HUD guidelines)? What size loan can Tarek afford based on your answer, assuming that he can obtain a 5.5% loan for 26 years?

As per HUD guidelines the maximum monthly principal and interest payment Tarek can afford is $............

Tarek can afford the loan size of $ .......

Answer 1