Suppose you take out a 20-year mortgage for a house that costs $332,294. Assume the following:...

Suppose you take out a 20-year mortgage for a house that costs $332,294. Assume the following: The annual interest rate on the mortgage is 4%. The bank requires a minimum down payment of 18% at the time of the loan. The annual property tax is 1.6% of the cost of the house. The annual homeowner's insurance is 0.7% of the cost of the house. The monthly PMI is $70 Your other long-term debts require payments of $937 per month. If you make the minimum down payment, what is the minimum gross monthly salary you must earn in order to satisfy the 28% rule and the 36% rule simultaneously? Round your answer to the nearest dollar.

Expert Solution

Given,

Cost of house= $332,294

Down payment= 18%

Hence mortgage amount= $332,294*(1-18%) = 272481.08

Monthly mortgage payment= $ 1,651.18 as follows:

Minimum gross monthly salary needed in order to satisfy the 28% rule and the 36% rule simultaneously= $9,153 Calculated as follows:

jeff jeffy answered 1 year ago

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