The Drummonds have decided to build a new house. The contractor quoted them a price of $135,700. The taxes on the house will be $3450 per year, and homeowners’ insurance will be $350 per year. They have applied for a conventional loan from a local bank. The bank is requiring a 25% down payment, and the interest rate on the loan is 4.5%. The Drummonds’ annual income is $64,000. They have more than 10 monthly payments remaining on each of the following: $218 on a car, $120 on new furniture, and $190 on a camper. Their bank will approve a loan that has a total monthly house payment of principal, interest, property taxes, and homeowners’ insurance that is less than or equal to 28% of their adjusted monthly income. Determine

a) The required down payment.

b) 28% of their adjusted monthly income.

c) The monthly payment of principal and interest for a 30-year loan.

d) Their total monthly payment, including insurance and taxes.
e) Do the Drummonds qualify for the mortgage?