Question: A young couple has saved up $18,000 for a down payment on a home. They are currently paying $1,700 per month to rent a condo.

A young couple has saved up $18,000 for a down payment on a home. They are currently paying $1,700 per month to rent a condo. The couple is pre-approved for a 35-year mortgage at 7% and their realtor estimates that they will need to set aside $3,100 for taxes and other costs at the time of the sale.

A) What is the price of the most expensive home they can buy without raising their monthly housing payment?

B) If the couple opts out for a 30-year mortage at 5.7% how much is the most expensive home they can buy?

C) If the couple were to borrow the maximum amount you found in parts (a) and (b), how much more would they pay in interest with the 40-year-mortgage?

D) If the couple decides that they can afford to go up $1,100 per month, how much more can they afford to spend on a home for each loan option?

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