To assist in the preparation of the worksheet, Paloma and Anthony have collected the following information: • Their financial records report a combined gross, before tax, annual income of $105,000, and current (pre-mortgage) installment loan, credit card and car loan, debt of $1,531 per month. • Their best estimate of the interest rate on the new mortgage is 7.5%, and they are interested in obtaining a 15-year loan. • They have accumulated savings of $56,500 that can be used to satisfy the home's down payment and closing costs. • The lender requires a minimum 20% down payment. Note: When completing the form, round each dollar amount to the nearest whole dollar. Unless labeled differently, all of the values in the worksheet represent dollar amounts. Also, this problem contains additional information that may not be necessary to generate your solutions to the questions. Home Affordability Worksheet Based on the Front-end ratio High Value Low Value Amount . Annual lincome 2. Lender's front-end income affordability ratio 29% 25% 3. Maximum allowable annual housing (PITI) payment 4. Maximum allowable monthly housing (PITI) payment Based on the Back-end ratio 5. Monthly income 6. Existing monthly installment payments 7. Existing monthly installment payments as percentage of monthly income 8. Lender's monthly installment loan affordability ratio 9. Maximum amount of total monthly affordable installment debt % 41% 33% 10. Maximum monthly mortgage payment (PITI), given existing debt payments
To assist in the preparation of the worksheet, Paloma and Anthony have collected the following information: • Their financial records report a combined gross, before tax, annual income of $105,000, and current (pre-mortgage) installment loan, credit card and car loan, debt of $1,531 per month. • Their best estimate of the interest rate on the new mortgage is 7.5%, and they are interested in obtaining a 15-year loan. • They have accumulated savings of $56,500 that can be used to satisfy the home's down payment and closing costs. • The lender requires a minimum 20% down payment. Note: When completing the form, round each dollar amount to the nearest whole dollar. Unless labeled differently, all of the values in the worksheet represent dollar amounts. Also, this problem contains additional information that may not be necessary to generate your solutions to the questions. Home Affordability Worksheet Based on the Front-end ratio High Value Low Value Amount . Annual lincome 2. Lender's front-end income affordability ratio 29% 25% 3. Maximum allowable annual housing (PITI) payment 4. Maximum allowable monthly housing (PITI) payment Based on the Back-end ratio 5. Monthly income 6. Existing monthly installment payments 7. Existing monthly installment payments as percentage of monthly income 8. Lender's monthly installment loan affordability ratio 9. Maximum amount of total monthly affordable installment debt % 41% 33% 10. Maximum monthly mortgage payment (PITI), given existing debt payments
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
100%
Transcribed Image Text:To assist in the preparation of the worksheet, Paloma and Anthony have collected the following information:
• Their financial records report a combined gross, before tax, annual income of $105,000, and current (pre-mortgage) installment loan,
credit card and car loan, debt of $1,531 per month.
• Their best estimate of the interest rate on the new mortgage is 7.5%, and they are interested in obtaining a 15-year loan.
• They have accumulated savings of $56,500 that can be used to satisfy the home's down payment and closing costs.
• The lender requires a minimum 20% down payment.
Note: When completing the form, round each dollar amount to the nearest whole dollar. Unless labeled differently, all of the values in the worksheet
represent dollar amounts. Also, this problem contains additional information that may not be necessary to generate your solutions to the questions.
Home Affordability Worksheet
Based on the Front-end ratio
High Value
Low Value
Amount
. Annual
lincome
2. Lender's front-end income affordability ratio
29%
25%
3. Maximum allowable annual housing (PITI) payment
4. Maximum allowable monthly housing (PITI) payment
Based on the Back-end ratio
5. Monthly income
6. Existing monthly installment payments
7. Existing monthly installment payments as percentage of monthly income
8. Lender's monthly installment loan affordability ratio
9. Maximum amount of total monthly affordable installment debt
%
41%
33%
10. Maximum monthly mortgage payment (PITI), given existing debt payments
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