You are ready to buy a house and you have $50,000 for a down payment and closing costs. Closing costs are estimated to be 3.5% of the loan value. You have an annual salary of $120,000. The bank is willing to allow your monthly mortgage payment to be equal to 28% of your monthly income. The interest rate on the loan is 6% per year with monthly compounding (.5% per month) for a 30-year fixed rate loan.
How much money will the bank loan you?
How much can you offer for the house?
Create a loan amortization table in Excel and submit the spreadsheet.