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# MystatLab Homework Help Sample

Q1

A couple found a house selling for \$114 comma 500. The taxes on the house are \$1300 per year, and insurance is \$340 per year. They are requesting a conventional loan from the local bank. The bank is currently requiring a 15% down payment and 3 points, and the interest rate is 10%. The couple's gross monthly income is \$4750. They have more than 10 monthly payments remaining on a car, a boat, and furniture. The total monthly payments for these items are \$420. Their bank will approve a loan that has a total monthly mortgage payment of principal, interest, property taxes, and homeowners' insurance that is less than or equal to 28% of their adjusted monthly income. Complete parts a) through g) below.

Q2.

## MystatLab Homework Help Sample Answer

A couple found a house selling for \$ 113,500. The taxes on the house are \$1400 per year, and insurance is \$320 per year. They are requesting a conventional loan from the local bank. The bank is currently requiring a 15% down payment and 3 points, and the interest rate is 10%. The couple's gross monthly income is \$ 4750.They have more than 10 monthly payments on a car, a boat, and furniture. The total monthly payments for these items is \$430.Their bank will approve a loan that has a total monthly mortgage payment of principal,interest,property taxes,and homeowners' insurance that is less than or equal to 28% of their adjusted monthly income.
a. Determine the required down payment
b. Determine the cost of 3 points
c. Determine 28% of their adjusted monthly income
d. Determine the monthly payments of principal and interest for a 20 year loan
e. Determine their total monthly payment, including homeowners' insurance and taxes
f. Determine whether the couple will qualify for the 20 year loan
g. Determine how much of the first payment on the loan is applies to the principal.

 House Cost 113500 Tax 1400 Per year 116.6666667 per month Insurance 320 Per year 26.66666667 per month Downpayment 17025 0.15*113500 Points 3 Rate 0.1 Gross Monthly income 4750 Monthly EMI for Other Prooduct 430 Cost of 3 points 2894.25 0.03*(113500-17025) Adjusted monthly income 4320 4750-1430 28% of adjusted monthly income 1209.6 after 3 points rate 0.12 Monthly payment for 20 yrs \$1,062.27 using PMT Function Total Monthly Payment \$1,205.61

Yes they will qualify for the loan as 1205.61 is less than 1209.6 which is the required critertia.

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