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O,000 per year gross. They have debt as follows: a an with $450 per month payment, a visa which quires a minimum monthly payment of $100, and ombined student loan payments totaling 350 per onth. The bank allows a 32% GDS and 40% TDS. T buse they wish to purchase has been appraised at S

O,000 per year gross. They have debt as follows: a an with $450 per month payment, a visa which quires a minimum monthly payment of $100, and ombined student loan payments totaling 350 per onth. The bank allows a 32% GDS and 40% TDS. T buse they wish to purchase has been appraised at S

Essentials Of Investments
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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Bob earns $48,000 per year and his wife Susan earns $ 50,000 per year gross. They have debt as follows: a car loan with $450 per month payment, a visa which requires a minimum monthly payment of $100, and combined student loan payments totaling 350 per month. The bank allows a 32% GDS and 40% TDS. The house they wish to purchase has been appraised at $ 210,000, however the purchase price is $215,000 because it is a seller's market. Monthly property taxes and heating costs are $400 per month total. They are applying for a conventional mortgage (using 80% maximum as the bank's rule) and their selected term is at 3.5% interest lender posted rate and the amortization is 25 years. Currently, consider the Bank of Canada benchmark rate to be 5.25% for stress test purposes on conventional mortgages. Which of the following is closes to the maximum amount of a mortgage loan that Bob and Susan qualify for, based on the Total Debt Service (TDS)? a. $393,908 b. $350, 250 c. $362, 554 d. $322,252
Transcribed Image Text:Bob earns $48,000 per year and his wife Susan earns $ 50,000 per year gross. They have debt as follows: a car loan with $450 per month payment, a visa which requires a minimum monthly payment of $100, and combined student loan payments totaling 350 per month. The bank allows a 32% GDS and 40% TDS. The house they wish to purchase has been appraised at $ 210,000, however the purchase price is $215,000 because it is a seller's market. Monthly property taxes and heating costs are $400 per month total. They are applying for a conventional mortgage (using 80% maximum as the bank's rule) and their selected term is at 3.5% interest lender posted rate and the amortization is 25 years. Currently, consider the Bank of Canada benchmark rate to be 5.25% for stress test purposes on conventional mortgages. Which of the following is closes to the maximum amount of a mortgage loan that Bob and Susan qualify for, based on the Total Debt Service (TDS)? a. $393,908 b. $350, 250 c. $362, 554 d. $322,252
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