he Adeeva's gross monthly income is $4300. They have 18 remaining payments of 240 on a new car. They are applying for a 15-year, $53,000 mortgage at 7.5 %. The taxes and insurance on the house are $ 410 per month. The bank will only approve a loan that has a total monthly mortgage payment of principal, interest, property taxes, and homeowners' insurance that is less than or equal to 28% of their adjusted monthly income. Complete parts (a) through (c) below.
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(a) Determine Adeeva's total monthly debt payments for their car.
The total monthly debt payments for Adeeva's car are 18 payments of $240, which equals $4320 in total. Dividing this by 18 gives a monthly payment of $240.
(b) Determine the maximum monthly mortgage payment for Adeeva.
First, we need to calculate Adeeva's adjusted monthly income. To do this, we need to subtract their monthly car payment from their gross monthly income:
Adjusted monthly income = $4300 - $240 = $4060
Now, we need to calculate 28% of Adeeva's adjusted monthly income:
0.28 x $4060 = $1136.80
Therefore, the maximum monthly mortgage payment for Adeeva is $1136.80, which includes principal, interest, property taxes, and homeowners' insurance.
(c) Determine whether Adeeva can be approved for the $53,000 mortgage at 7.5% interest rate.
To determine this, we need to calculate the monthly mortgage payment for the $53,000 mortgage at 7.5% interest rate. To do this, we can use an online mortgage calculator or a mortgage payment table. We found the monthly payment using an online mortgage calculator to be $409.56 per month.
Since the monthly mortgage payment of $409.56 is less than or equal to the maximum monthly mortgage payment of $1136.80 calculated in part (b), Adeeva can be approved for the $53,000 mortgage at 7.5% interest rate, provided they meet other requirements from the bank.