Bob earns $48,000 per year and his wife Susan earns $50,000 per year gross. They have debt
Question:
Bob earns $48,000 per year and his wife Susan earns $50,000 per year gross. They have debt as follows: a car loan with $450 per month payment, a visa which requires a minimum monthly payment of $100, and combined student loan payments totaling 350 per month. The bank allows a 32 % GDS and 40% TDS. The house they wish to purchase has been appraised at $210,000, however the purchase price is $215,000 because it is a seller’s market. Monthly property taxes and heating costs are $400 per month total. They are applying for a conventional mortgage (using 80% maximum as the bank’s rule) and their selected term is at 3% interest lender posted rate and the amortization is 25 years. Currently, consider the Bank of Canada benchmark rate to be 4.95% for stress test purposes on conventional mortgages.
Which of the following is closest to the maximum amount of a mortgage loan that Bob and Susan qualify for, based on the Total Debt Service (TDS)?
Using Financial Accounting Information The Alternative to Debits and Credits
ISBN: 978-1133161646
7th Edition
Authors: Gary A. Porter, Curtis L. Norton