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Suppose you plan to purchase a house. You add up all your current monthly expenses and...

Suppose you plan to purchase a house. You add up all your current monthly expenses and subtract them from your monthly net salary and discover a $1,500 surplus. You also have $40,000 in a savings account accruing interest at a 2.50% rate. You deposit your surplus of $1,500 each month for a year before purchasing a house. You apply for a 30 year mortgage and get approved for $500,000 at a 2.7% interest rate. You are unsure if you can afford a house that costs $500,000. How much of a mortgage you can afford to take out

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Answer #1

The mortgage amount that we can afford to take is $369824.65 by using surplus monthly savings as monthly payment

Rate = Interest rate per month

NPER = Total monthly Payment

PMT = surplus amount = $1500

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