Explain this worksheet 11 using examples. 1-2 a summary

Now that you expanded your knowledge regarding long-term financing for a home or vehicle purchase as well as any regulatory or recommended insurance requirements, consider the purchase of a new home, vehicle, or both. You may even contemplate the future purchase of a vacation home, or a recreational vehicle. How would these changes affect your financial plan?

Includes all of the main elements of the mortgage and/or vehicle purchase analysis

Provides in-depth analysis that demonstrates complete understanding of multiple concepts for mortgage and/or vehicle purchase

Draws insightful conclusions that are thoroughly defended with evidence and examples for mortgage and/or vehicle purchase analysis

m 11 WORKSHEET Worksheet for Calculating the Maximum Monthly Mortgage Payment and Mortgage Size for Which You Can Qualify Method 1 Determine Your Maximum Monthly Mortgage Payment Using the Ability to Pay, PITI Ratio. a. Monthly income (annual income divided by 12) $5,200 b. Times 0.28: Percentage of PITI (Principal, interest, taxes, and insurance) to your monthly gross income that lenders will lend in the form of a mortgage loan (multiply line a by 0.28) x 0.28 = c. Less: Estimated monthly real estate tax and insurance payments - d. Equals: Your maximum monthly mortgage payment using the 28% of PITI ratio = To Determine the Maximum Mortgage Loan Level Using the Maximum Monthly Mortgage Payments as Determined Using the PITI Ratio (line d): Step 1: Monthly mortgage payment for a $10,000 mortgage with a _ year maturity and a % interest rate (using Table 8.1) Step 2: Maximum mortgage level = maximum monthly mortgage payment (line d) divided by the monthly mortgage payment on a $10,000, _%, _year mortgage (step 1 above) times $10,000 = (line distep l) x $10,000 = $231,103 50.57 Method 2 Determine Your Maximum Monthly Mortgage Payment Using the Ability to Pay, PITI Plus oth Fixed Monthly Payments, Ratio. e. Monthly income (annual income divided by 12) $5,200 f. Times 0.36: Percentage of PITI + current monthly fixed payments to your monthly gross income that lenders will lend in the form of a mortgage loan (multiply line a by 0.35) x 0.36 g. Less: Current nonmortgage debt payments on debt that will take over 10 months to pay off and other monhtly legal obligations such as child support and allimony payments h. Less: Estimated monthly real estate tax and insurance payments i. Equals: Your maximum monthly mortgage payment using the 35% of PITI + other fixed $2,232 $786 $565 _ l: =