Question

1)You want to buy a house and wonder what you can afford. Banks look at collateral, creditworthiness and capacity (ability to pay) when making loans. Assume you have sufficient down payment and credit score. Your bank has a requirement of 28% housing expense ratio and your gross annual income is $69,000.

Based on those assumptions, **how much can you afford to
pay in total housing costs each month?**

2) You are looking to purchase a new home that is listed at
$324,000. You intend to make an offer to buy this house at the full
listed price. You have saved enough to make a 20% down payment, so
the loan amount will be 80% of the purchase price. You are talking
to a lender about a 30-year, fixed rate, amortizing loan. The
mortgage constant is 0.05305. **What is the amount
of your monthly debt service?**

**3)** Lenders look at PITI, which is Principal,
Interest, Taxes, and Insurance. You calculated debt service
(Principal and Interest) in the previous question. Now assume that
property taxes are $2,400 *per year* and insurance is $60
*per month*. Based on these assumptions and the debt service
amount you calculated in the previous question, **what is
your total monthly PITI**?

You have now calculated what you can afford to spend on housing in Q1 and what this house will really cost (PITI) in Q3. Based on these calculations, will the bank make you this loan? Why or why not? If not, what is the concern?

Answer #1

**formulas Used:-**

gross annual
income |
69000 |

total home
value |
324000 |

down
payment |
=D3*0.2 |

Loan
Value |
=D3-D4 |

Annual
Rate |
0.05305 |

tenure
(years) |
30 |

monthly debt
service |
=PMT(D6/12,D7*12,-D5) |

tax
(monthly) |
200 |

Insurance |
60 |

total monthly
PITI |
=D8+D9+D10 |

monthly housing Exp.
Allocation |
=D2*28%/12 |

bank will not make a Loan because the Total montly PITI requirement is $1700.01 and according to his income he can only spend $1610 on housing expeces hence due to not having ability to repay bank will not grant the loan.

You are shopping for a house and wonder what you can afford.
Banks look at collateral, creditworthiness and capacity (ability to
pay) when making loans. Assume you have sufficient downpayment and
credit score. Your bank has a requirement of 28% housing expense
ratio and your gross monthly income is $5,450. How much can you
afford to pay in principal, interest, taxes an insurance (PITI)
each month?
Show how you calculated how much you can afford to spend on a
home...

1.)
You
want to buy a house in Hermosa Beach CA, but you can only afford to
make monthly payments of $7,100. The interest rate on mortgages
right now is 4.25% p.a. with monthly compounding (APR), fixed for
30 years, with monthly payments. You have $155,000 saved to use as
a downpayment. What is the most that you can afford to pay for a
house (ignoring closing costs, property taxes, etc..)?
Answer: $1,598,265.76
2.)
Under
the same assumptions described in...

Estimate the maximum house value you can afford to buy. Assume
the mortgage is fixed rate, 30-year maturity, 80% LTV, with no
points. The interest rate is quoted is 3.5% with monthly payments.
The property tax rate in the city is 0.7% per year based on
property value; the hazard insurance premium is 0.5% per year based
on property value, and that on average you should consider $50 per
month for maintenance. Determine the required monthly payment for
the mortgage...

you want to buy a house that costs $380612.98, but all
you can afford to pay on a weekly mortgage for the house is
$4596.87 per week for 29 years. thanks bank quoted you a mortgage
rate of 5.05% to buy this house without putting any money down or
having a balance owing at the end of the mortgage, you would have
get the bank to lend you money at a lowest rate. what rate would
they have to quote...

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...

Develop a spreadsheet model to determine how much a person or a
couple can afford to spend on a house. Lender guidelines suggest
that the allowable monthly housing expenditure should be no more
than 28% of monthly gross income. From this, you must subtract
total nonmortgage housing expenses, which would include insurance
and property taxes and any other additional expenses. This defines
the affordable monthly mortgage payment. In addition, guidelines
also suggest that total affordable monthly debt payments, including
housing...

You friend Stephen is planning to buy a house. He believes he
can afford a mortgage payment of $3,750 per month. The current
interest rate on a 30 year mortgage is 3.25% per year. What is the
largest mortgage he can afford based on a 30 year loan if the
lender requires a 20% downpayment? How much does he need in down
payment for the most expensive house he can afford? ]

If you want to buy a car, and you can afford a monthly payment
of $400, how large of a loan can you get at 7.9% interest over 60
months(5 years)? Round your answer to the nearest dollar.

Vivian wants to buy a house. The house she wants is listed for
$350,000. What if Vivian can only pay a 15% down payment, what
would her first monthly payment be for the 30-year mortgage at
3.75%? (Assume PMI insurance cost is 1% of the loan amount per
year.)

You want to buy a house that costs $320,000. You will make a
down payment equal to 20 percent of the price of the house and
finance the remainder with a loan that has an interest rate of 4.55
percent compounded monthly. If the loan is for 30 years, what are
your monthly mortgage payments?

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 5 minutes ago

asked 32 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago