Question

Can Jacob and Madison Afford This Home Using the Installment Debt Loan Criterion? Next week, your friends Jacob and Madison want to apply to the Tenth National Bank for a mortgage loan. They are considering the purchase of a home that is expected to cost $185,000. Given your knowledge of personal finance, they've asked for your help in completing the Home Affordability Worksheet that follows. (Note: When completing the form, round each dollar amount to the nearest whole dollar.) To assist in the preparation of the worksheet, Jacob and Madison also collected the following information: • Their financial records report a combined gross before-tax annual income of $85,000 and current (pre-mortgage) installment loan, credit card, and car loan debt of $1,240 per month. . Their property taxes and homeowner's insurance policy are expected to cost $1,388 per year. • Their best estimate of the interest rate on their mortgage is 7.5%, and they are interested in obtaining a 15-year loan. • They have accumulated savings of $44,500 that can be used to satisfy the home's down payment and closing costs. • The lender requires a minimum 20% down payment, and installment loan affordability ratios that range from a minimum of 33% to a maximum of 38%. A table of monthly payments (necessary to repay a $10,000 loan) follows.

Answer 1

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Answer 2

These answers are wrong. After doing these problems myself, i searched to find a reference to check my answers and came across this work... Safe to say I followed it and got not only this problem but also the next problem wrong using the same order of working. 

Tread lightly when using this..