3 years ago

Many conservative consumer advocates said you should not pay more than 25% of your TAKE-HOME PAY on a mortgage payment

Business

1 answer:

Oksi-84 [34.3K]3 years ago

8 0

Answer:

True

Explanation:

There is a general consensus that one has to be very conservative and avoid spending more than 35 percent of pretax income on home insurance payment, property tax, and mortgage. However the conservative model clearly suggests that mortgage payment should not exceed 25 percent of take-home pay and any mortgage loan should not exceed a 15 year tenure.

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Suppose the nominal annual interest rate on a two-year loan is 8 percent and lenders expect inflation to be 5 percent in each of

Kisachek [45]

Answer:

C. 2 percent.

Explanation:

The computation of the annual real rate of interest is presented below:

Provided that

Nominal annual interest rate = 8%

Inflation rate = 5%

So, the annual real rate of interest is

Real rate of return = {( 1 + nominal annual rate of return) ÷ ( 1 + inflation rate)} - 1