You are applying for a conventional mortgage from the Americana Bank. Yourmonthly gross income is $3,500, and the bank uses the 28% housing expenseratio guideline.a. What is the highest PITI you can qualify for? Hint: Solve the housing expenseratio formula for PITI. (Remember, this is an application of the percentage formula,Portion = Rate x Base, where PITI is the portion, the expense ratio is the rate, andyour monthly gross income is the base.)b. Based on your answer from part a, if you are applying for a 30-year, 9% mortgage,and the taxes and insurance portion of PITI is $175 per month, use Table 14-1 tocalculate what size mortgage you qualify for. Hint: Subtract TI from PITI. Divide thePI by the appropriate table factor to determine how many $1,000s you qualify to borrow.c. Based on your answer from part b, if you are planning on a 20% down payment, whatis the most expensive house you can afford? Hint: Use the percentage formula again.The purchase price of the house is the base, the amount financed is the portion, andthe percent financed is the rate.

Gross Income- A mortgage loan can only finance movable property. Land, trees, buildings, and…

Answered: (ou are applying for a conventional…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

13) Some financial advisors recommend that your monthly mortgage payment be no higher than 28% of your monthly net income. What is 28% of your monthly net income, as determined in question twelve? This is the estimated amount you can afford per month for a mortgage. 4,518*0.28 $1,265 28% of my monthly net income is $1,265. 14) We can calculate how much of a house you can afford using the loan formula. In question thirteen, you determined the monthly mortgage payment you can afford. Using this value for the regular monthly payment, calculate the present value (P), assuming you receive a 30-year mortgage (loan) with an annual interest rate of 6.328% with monthly compounding. (Note: This rate is realistic for a mortgage initiated in January 2024.) I need to use Loan formula to find the present value (P). please help me
A mortgage applicant who has a monthly gross income of $4,285.00 applies for a mortgage with monthly PITI of $1,542.60. The applicant's other financial obligations total $231.39 per month. If the lending ratio guidelines are as given in the table below, what type of mortgage, if any, would the applicant qualify for?
Using the maximum ratios for a conventional mortgage, how big a monthly payment could the Sanchez family afford if their gross (before-tax) monthly income amounted to $5,000? (Hint: Monthly mortgage payments cannot exceed 25 to 30 percent of the borrower's monthly gross income and the borrower's total monthly installment loan payments (including the mortgage payment) cannot exceed 33 percent to 38 percent of monthly gross income.) $ Would it make any difference if they were already making monthly installment loan payments totaling $600 on two car loans? Maximum mortgage payment they could make would be $ .
A borrower with a 645 credit score is buying a $449,481 home with 95% LTV financing. The percent annual premium from the private mortgage insurance (PMI) company is 1.43% for a 30% coverage policy. The borrower's monthly premium payment is? Note: the question is asking for the monthly premium only, not the loan payment + premium. (Input your answer rounded to the nearest whole penny and without the $ sign, e.g., 1000.01)
A family wishes to buy a $235,900 home. - If a conventional lender is willing to loan the family 87% of the price of the home, what will the loan amount be? What will be the down payment with the loan? - If the family decides to obtain an FHA loan instead, what will the minimum down payment be? (FHA loan down payments are 3.5% of the first $25,000 and 5.2% of the balance of the loan). What is the maximum FHA loan the family can obtain?
Calculate the housing expense ratio and the total obligation ratio (in %) for the following mortgage applications. (Round your answers to two decimal places.) Applicant MonthlyGrossIncome MonthlyPITIExpense Other MonthlyFinancialObligations HousingExpenseRatio (%) TotalObligationsRatio (%) Emerson $2,700 $633 $270 % %
fill out the worksheet using the following information: Theoretical Housing Situation: Renting: Monthly Rent: $1,800 Renter’s Insurance: $200 per year Security Deposit: $2,000 After-tax Savings Rate: 5% Buying: Home Price: $250,000 Down Payment: $50,000 Loan Amount: $200,000 Loan Term: 25 years Interest Rate: 3.5% Property Taxes: 1.25% of the home price Homeowner’s Insurance: 0.4% of the home price Maintenance Costs: 1.5% of the home price Closing Costs: $5,000 After-tax Rate of Return: 4% Tax Rate: 25% Estimated Annual Appreciation: 2%
Calculate the housing expense ratio and the total obligation ratio (in %) for the following mortgage applications. (Round your answers to two decimal places.) Applicant Emerson Monthly Monthly Gross PITI Income Expense $2,700 $633 Other Monthly Financial Obligations $270 Housing Expense Ratio (%) % Total Obligations Ratio (%) %

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS