Contemporary Mathematics for Business and Consumers 7th Edition by Robert Brechner ,George Bergeman

Exercise 147

You are a loan officer at the West Elm Savings and Loan. Mr. and Mrs. Brady are in your office to apply for a mortgage loan on a house they want to buy. The house has a market value of $180,000. Your bank requires
of the market value as a down payment.
a. What is the amount of the down payment?
b. What is the amount of the mortgage for which the Bradys are applying?
c. Your bank offers the Bradys a 30-year mortgage with a rate of 5 percent. At that rate, the monthly payments for principal and interest on the loan will be $5.37 for every $1,000 financed. What is the amount of the principal and interest portion of the Bradys' monthly payment?
d. What is the total amount of interest that will be paid over the life of the loan?
e. Your bank also requires that the monthly mortgage payments include property tax and homeowners insurance payments. If the property tax is $1,710 per year and the property insurance is $1,458 per year, what is the total monthly payment for PITI (principal, interest, taxes, and insurance)?
f. To qualify for the loan, bank rules state that mortgage payments cannot exceed
of the combined monthly income of the family. If the Bradys earn $3,750 per month, will they qualify for this loan?
g. What monthly income would be required to qualify for this size mortgage payment?