Extracted text: Exhibit 9-8 Housing affordability and mortgage qualification amounts Example A Example B Step 1: Determine your monthly $48,000 - 12 $48,000 - 12 gross income (annual income divided by 12). Step 2: With a down payment of at $4,000 $4,000 least 5 percent, lenders use x 38 x 33 33 percent of monthly gross $1,520 $1,320 income as a guideline for PITI (principal, interest, taxes, and insurance) and 38 percent of monthly gross income as a guideline for Term Rate 30 Yoars 25 Yoars 20 Yoars 15 Years PITI plus other debt payments. 3.0% $4.22 $4.74 $5.55 $6.91 Step 3: Subtract other debt -380 3.5 4.49 5.01 5.80 7.15 payments (e.g., payments -300 -300 an auto loan) and an 4.0 4.77 5.28 6.06 7.40 estimate of the monthly 4.5 5.07 5.56 6.33 7.65 costs of property taxes and homeowner's insurance. 5.0 5.37 5.85 6.60 7.91 (a) Affordable monthly mortgage $ 840 $1,020 5.5 5.68 6.14 6.88 8.17 payment 6.0 6.00 6.44 7.16 8.43 Step 4: Divide this amount by the -$7.34 -$7.34 monthly mortgage payment x $1,000 x $1,000 6.5 6.32 6.67 7.45 8.71 per $1,000 based on current 7.0 6.65 7.06 775 8.98 mortgage rates-an 8 percent, 30-year loan, for example (see Exhibit 9-9E) -and multiply by $1,000. 7.5 6.99 7.39 8.06 9.27 8.0 7.34 7.72 8.36 9.56 (b) Affordable mortgage amount $114,441 $138.965 8.5 7.69 8.05 8.68 9.85 Step 5: Divide your affordable +.9 mortgage amount by 1 minus the fractional portion of your down payment (e.g., 1-1 with a 10 percent down payment). (c) Affordable home purchase price $127,157 $154,405 Note: The two ratios lending institutions use (atep 2) and other loen requirements may vary besed on a variety of factors, including the type of mortgage, the amount of the down payment, your income level, and current interest retes For example, with a down payment of 10 percent or more and a credit score exceeding 720, the retios might incresse to 40/45 or 45/50 percent in the above
Extracted text: Estimate the affordable monthly mortgage payment, the affordable mortgage amount, and the affordable home purchase price for the following situation. (Refer to Exhibit 9-8 and Exhibit 9-9) (Round time value factor to 2 decimal places, intermediate and final answers to the nearest whole number.) Mortgage Costs Monthly gross income Down payment to be made (percent of purchase price) Other debt (monthly payment) 2$ 4,250 20 Percent $ 220 Monthly estimate for property taxes and insurance 30-year loan 280 7.0 Percent Affordable Amount Affordable monthly mortgage payment Affordable mortgage amount Affordable home purchase price