Penny and Ernest want to purchase a new home for $150,000. Their combined income is $58,000, and they will make a down payment of $48,000.  Taxes on the house are $1,800 per year and the heating cost is $1,300 annually. The house includes condo fees of $500. The couples other debt payments are $623 per month for their car loan and their student loan. In order to keep payments low, the mortgage will be amortized over 25 years. The interest rate on a 5-year mortgage term is 6%. What is their monthly mortgage payment?

5.Referring to above question, assume Penny and Ernest lose this deal and want to know the maximum amount of money they can borrow. If the bank's maximum TDS is 40%, what is the largest payment they can handle? Hint: determine the maximum monthly mortgage payment using the TDS formula and the information provided in above question.

 

6. Referring to above questions, what would be the amount of the mortgage if they decide to make the maximum mortgage payment?

Answer rating: 100% (QA)

To calculate the monthly mortgage payment we first need to determine the principal amount of the mortgage Principal amount House price Down payment 150000 48000 102000 Next we need to calculate the mo... View the full answer