Answer:
West Elm Savings and Loan
a) The amount of the down payment is:
= $34,000
b) The amount of the mortgage for which the Bradys are applying is:
= $170,000.
c) The amount of the principal of $136,000 ($170,000 - $34,000) and the interest portion of the monthly payment by the Brady's is:
= $730.32
d. The total amount of interest that will be paid over the life of the loan is:
= $126,915.20
e) Total monthly payment = $994.32
f) No, they will not qualify.
g) The monthly income that would be required to qualify for this size of mortgage payment is:
= $3,977.28
Step-by-step explanation:
a) Data and Calculations:
Market value of mortgage house = $170,000
Required down payment = 1/5 or 20%
a) The amount of the down payment = $34,000 ($170,000 * 20%)
b) The amount of the mortgage for which the Bradys are applying is = $170,000.
c) Interest on the loan = $5.37 for every $1,000
The amount of the principal of $136,000 ($170,000 - $34,000) and interest portion of the monthly payment by the Brady's = $730.32 ($5.37 * $136,000/$1,000)
d. The total amount of interest that will be paid over the life of the loan is:
= $126,915.20 ($262,915.20 - $136,000)
Sum of all periodic payments = $262,915.20 = ($730.32 * 12 * 30)
e) Annual Property tax = $1,710
Annual Property insurance 1,458
Total additional annual pyts $3,168
Monthly additional costs = $264 ($3,168/12)
Total monthly payment = $994.32 ($730.32 + $264)
f) Bradys' combined monthly income = $3,750
Qualification threshold = $937.50 ($3,750/4)
No, they will not qualify.
g) The monthly income that would be required to qualify for this size of mortgage payment is:
= $3,977.28 ($994.32/0.25)
