Mason is applying for a 30-year mortgage with a 5% interestrate. Mason has an annual...

Mason is applying for a 30-year mortgage with a 5% interest rate. Mason has an annual income of $50,000 and has no additional debt. His estimated monthly property taxes and homeowners insurance is equal to $430. What is Mason’s affordable mortgage amount?

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Expert Solution

Monthly income = $50,000 / 12 = $4,166.67

33% of monthly income = $4,166.67 * 33% = $1,375

Affordable monthly mortgage amount = $1,375 - $430 = $945

Affordable mortgage amount = (Affordable monthly mortgage amount * 1000) / Current mortgage rate(8%,30 year loan)
= ($945 * 1000) / 5.37
= 945,000 / 5.37
= $175,977.65

Affordable mortgage amount = $175,977.65

jeff jeffy answered 2 years ago

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