Jill wants to buy a home. Her monthly gross income (GI) is $7,000. She currently has a car payment of $480/month. The bank wants her to escrow $450/month for taxes (T) and insurance (HI). The bank requires the following income and loan ratios; a minimum down payment of 20%, a P&I as a percent of GI ratio < 25%, a P, I, T, & HI as a percent of GI ratio < 28%, a P, I, T, HI and other debt service as a percent of GI ratio < 36%, and a LTV ratio of 80% or less. What is the maximum market value of a home that Jill could purchase given a current market rate on a 30-year fixed rate loan is 4.75%?
Jill wants to buy a home. Her monthly gross income (GI) is $7,000. She currently has a car payment of $480/month. The bank wants her to escrow $450/month for taxes (T) and insurance (HI). The bank requires the following income and loan ratios; a minimum down payment of 20%, a P&I as a percent of GI ratio < 25%, a P, I, T, & HI as a percent of GI ratio < 28%, a P, I, T, HI and other debt service as a percent of GI ratio < 36%, and a LTV ratio of 80% or less. What is the maximum market value of a home that Jill could purchase given a current market rate on a 30-year fixed rate loan is 4.75%?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Jill wants to buy a home. Her monthly gross income (GI) is $7,000. She currently has a car payment of $480/month. The bank wants her to escrow $450/month for taxes (T) and insurance (HI). The bank requires the following income and loan ratios;
- a minimum down payment of 20%,
- a P&I as a percent of GI ratio < 25%,
- a P, I, T, & HI as a percent of GI ratio < 28%,
- a P, I, T, HI and other debt service as a percent of GI ratio < 36%, and
- a LTV ratio of 80% or less.
What is the maximum market value of a home that Jill could purchase given a current market rate on a 30-year fixed rate loan is 4.75%?
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