Problem:
If 2 people both are govt workers, and they are thinking of buying a home for $280,000, their monthly expenses, utilities are $220, maintenance is $ 100, property tax $380, home ins $50 and the only debt is a car loan of $350.
Her income is $55,000yrly and his $38,000 yearly and they saved $60,000 in a money market and earned $5,840 ly and they plan to use 20% for down payment and closing costs, a lender is offering a 30 yr variable rate loan with an initial rate of 8% given a 20% down payment and closing costs equals to $1,000 plus 3 points before making the purchase offer and applying for the loan they need to know if they qualify
1) estimate the affordable mortgage and purchase price and if they qualify what factors might they consider before buying and taking out a mortgage and what future changes might present a problem first I had up the monthly expenses then add their income together, then divide their income by 12 to get the monthly income, add their money market and interest together , then take 20% of the house value to get the down payment amount, to get the amount to borrow subtract the cost of the house from the down payment, we know that they had $60,000 + $5,840 in interest to use towards the down payment, so now the amount they have to mortgage is $226,328 for 30years with 3 points (3%) multiply that by the amount to mortgage then subtract that amount to get the total amount borrowed the contract rate is 8% then the interest rate multiplied by the contract rate to get interest I need to find the APR. I need to decide if they qualify for the mortgage and if they do what should they consider before taking the mortgage and buying the house and what change could occur inthe future all I need is to check the way the problem is done and how to get Apr and what the monthly mortgage might be.