4. Alternatively you decide the most you can afford in a monthly payment for a home is $750. You plan on taking out a 30 year loan for 4%. How much can you borrow? What is the total amount of home you can afford? (assume the $20000 down payment listed above)
750/mo. * 360mo. = $270,000 = Total cost,
P = (Po*r*t)/(1-(1+r)-t) = 270,000,
r = 0.04/12 = 0.000328/mo.
a. (Po*0.000328*360)/(1-1.000328^-360) = 270,000,
(Po*0.1180)/(0.1114) = 270,000,
1.059Po = 270,000,
Po = $254,898.31 = Max. amount that can be borrowed.
b. 254,898.31 + 20,000 = $274,898.31 = Max. amt. of home that I can afford.
To calculate how much you can borrow for a home, you need to consider your monthly payment and the terms of your loan.
First, let's calculate the maximum loan amount based on your monthly payment of $750. We'll use a loan calculator to determine the loan amount that corresponds to a monthly payment of $750 at a 4% interest rate and a 30-year loan term.
Using a loan calculator, you can input the values as follows:
Loan Amount: Unknown (Let's call it X)
Interest Rate: 4%
Loan Term: 30 years
Monthly Payment: $750
By adjusting the loan amount (X) in the calculator, you can find the value that corresponds to a monthly payment of $750.
After calculating this, you can determine the maximum loan amount you can borrow.
Now, let's calculate the total amount of the home you can afford, considering the $20,000 down payment mentioned above.
The total amount of home you can afford will be the sum of the maximum loan amount and the down payment.
Total Amount of Home You Can Afford = Maximum Loan Amount + Down Payment
Substituting the values you've found, you can calculate the total amount of home you can afford.
By following these steps, you can determine how much you can borrow for a home and the total amount of home you can afford.