A young married couple has carefully looked at their budget. After review, they can afford a monthly mortgage payment of $979.00. They go to their local banker and she offers them a mortgage of 4.20% APR with monthly compounding with a term of 30 years. The couple has enough savings to pay 20% down, so the mortgage will be 80% of the home’s value.
What is the mortgage that the couple can apply for based on their budget and the offered terms? With this mortgage and a 20% down payment, what priced house can the couple afford?