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Suppose you want to purchase a house. Your take-home pay is $4510$⁢4510 per month, and you...

Suppose you want to purchase a house. Your take-home pay is $4510$⁢4510 per month, and you wish to stay within the recommended guidelines for mortgage amounts by only spending 1414 of your take-home pay on a house payment. You have $19,000$⁢19,000 saved for a down payment and you can get an APR from your bank of 6%6%, compounded monthly. What is the total cost of a house you could afford with a 3030-year mortgage? Round your answer to the nearest cent, if necessary.

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Answer #1

Monthly Loan payment you can afford = $1414

Calculating the Loan amount based on monthly payment you can afford:-

Where, P = Loan amount

r = Periodic Interest rate = 6%/12 = 0.5%

n= no of periods = 30 years*12 = 360

P = $235,843.34

So, Loan amount can take is $235,843.34

Down-payment you have saved = $19,000

Total Cost of House you can afford = $235,843.34 + $19,000

Total Cost of House you can afford = $254,843.34

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