Hillary would like to purchase a $125,000 home, and is planning on making a $25,000 down payment for a 7.5 percent, 30-year, fixed-rate mortgage.
a) What is the required monthly principal and interest payment on this mortgage?
b) What is Hillary's loan-to-value ratio? Will a lender likely require her to obtain PMI? Explain.
c) Hillary's income is $3,450 per month. She also has the following monthly expenses:
Hazard insurance $50
Property taxes $100
Auto payment $150
Credit cards $ 50
Monthly utilities $175
Student loan $350
Calculate Hillary' s front-end and back- end ratios.Given these figures, will Hillary meet the income guidelines for a conventional for a conventional mortgage? Explain.