Question

In: Finance

2. Mortgage Affordability. Seth and Alexandra Moore of Elk Grove Village, Illinois, have an annual income...

2. Mortgage Affordability. Seth and Alexandra Moore of Elk Grove Village, Illinois, have an annual income of $110,000 and want to buy a home. Currently, mortgage rates are 5 percent. The Moores want to take out a mortgage for 30 years. Real estate taxes are estimated to be $4,800 per year for homes similar to what they would like to buy, and homeowner's insurance would be about $1,500 per year.

(a) Using a 28 percent front end ratio, what are the total monthly expenditures for which they would qualify?

(b) Using a 36 percent back-end ratio, what monthly mortgage payment (including taxes and insurance) could they afford given that they have an automobile loan payment of $470, a student loan payment of $350, and credit card payments of $250?

(c) Using a 36 percent back-end ratio, if the Moores had zero debt, what monthly mortgage payment (including taxes and insurance) could they afford?

Solutions

Expert Solution

jeff jeffy answered 11 months ago
Next > < Previous

Related Solutions

Mortgage affordability. Dhuha and Omar have an annual income of $183,408 and want to buy a...
Mortgage affordability. Dhuha and Omar have an annual income of $183,408 and want to buy a home. Currently, mortgage rates are 4.25 percent. They want to take out a mortgage for 30 years. Real estate taxes are estimated to be $9,764 per year for homes similar to what they would like to buy, and homeowner’s insurance would be about $2,504 per year. Using a 28 percent front end ratio, what are the total monthly expenditures for which they would qualify?...
Your annual income is $104,000. You have a spouse, two kids, a dog and a mortgage...
Your annual income is $104,000. You have a spouse, two kids, a dog and a mortgage – a typical family. Using the easy method to determine your need for life insurance, your insurance should be in the amount of:
Suppose your annual income is $50,000 and your lender will allow you to have a mortgage...
Suppose your annual income is $50,000 and your lender will allow you to have a mortgage payment that is no more than 33% of your monthly income after making other debt payments and paying property taxes, which in your case amount to $500 per month. If the current 30-year mortgage rate is 5%, approximately how large a mortgage can you qualify for (assuming you have the required cash for the necessary down payment)? a. $160,000 b. $161,000 c. $162,000 d....
Mortgage Payment You currently have a 30-year fixed rate mortgage with an annual interest rate of...
Mortgage Payment You currently have a 30-year fixed rate mortgage with an annual interest rate of 6%. You have had the mortgage 4 years, and on September 1, 2015 you made your 48th payment. The original principal amount was $280,000 and you monthly payment, without taxes and insurance, are $1,678.74 per month, computed using the Excel function =PMT(0.5%,360,280000,0,0). Starting with your original mortgage your banker calls and says that you could refinance your existing mortgage (6% rate, 30-year original term)...
You have obtained a mortgage for $100,000 with annual interest rate of 6% that is to...
You have obtained a mortgage for $100,000 with annual interest rate of 6% that is to be paid over 30 years (interest is compounded monthly). Your monthly payment is $600. Complete the first few rows of the loan amortization table (show how you got the number): Months Loan balance Loan payment Interest Principal 1 2 3
You currently have a 30-year mortgage with annual payments of $6000. Annual interest rate is 8%....
You currently have a 30-year mortgage with annual payments of $6000. Annual interest rate is 8%. In how many years, the balance on your mortgage will drop to half of its current value? Round your result to two decimal places (i.e., if the result is 7.6542, enter it as 7.65).
The consumer food database contains five variables: Annual Food Spending per Household, Annual Household Income, Non-Mortgage...
The consumer food database contains five variables: Annual Food Spending per Household, Annual Household Income, Non-Mortgage Household Debt, Geographic Region of the U.S. of the Household, and Household Location. There are 200 entries for each variable in this database representing 200 different households from various regions and locations in the United States. Annual Food Spending per Household, Annual Household Income, and Non-Mortgage Household Debt are all given in dollars. The variable Region tells in which one of four regions the...
The variables annual savings and annual income have been analyzed in a sample of families in...
The variables annual savings and annual income have been analyzed in a sample of families in a community, both measured in thousands of dollars. The data obtained has been the following: Savings 1.9, 1.8, 2.0, 2.1, 2.3, 2.0, 2.2, 2.3, 2.5, 2.4 Income 20.5, 20.8, 21.2, 21.7, 22.1, 22.3, 22.2, 22.6, 23.1, 23.5 1) Obtain the adjusted model that explains saving as a function of income: saving = f (income). 2) Interpret the regression coefficient 3) Interpret the coefficient of...
You have borrowed $100,000 on a 40-year mortgage with monthly payments. The annual interest rate is...
You have borrowed $100,000 on a 40-year mortgage with monthly payments. The annual interest rate is 16 percent. How much will you pay over the course of the loan? With four years left on the loan, how much will you still owe? Excel
You have borrowed $100,000 on a 40-year mortgage with monthly payments. The annual interest rate is...
You have borrowed $100,000 on a 40-year mortgage with monthly payments. The annual interest rate is 16 percent. How much will you pay over the course of the loan? With four years left on the loan, how much will you still owe? excel
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT