Over the past 40 years, interest rates have varied widely. The rate for a 30-year mortgage...

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Over the past 40 years, interest rates have varied widely. The rate for a 30-year mortgage reached a high of 14.75% in July 1984, and it reached 3.31% in November 2012. A significant impact of lower interest rates on society is that they enable more people to afford the purchase of a home. In the following exercise, we consider the purchase of a home that sells for $125,000. Assume that we can make a down payment of $25,000, so we need to borrow $100,000. We assume that our annual income is $34,000 and that we have no other debt. If we can afford to pay a monthly amount of $543.33, determine how much we can borrow if the term is 30 years and the interest rate is at the historic high of 14.75%. (Round your answer to the nearest dollar) S Can we afford the home? Yes No If we can afford to pay a monthly amount of $543.33, determine how much we can borrow if the term is 30 years and the interest rate is 3.31% (Round your answer to the nearest dollar) $ Can we afford the home now? Yes No How much more can you afford to borrow when the 30-year mortgage rate is at 3.31% compared to 14.75%7 Over the past 40 years, interest rates have varied widely. The rate for a 30-year mortgage reached a high of 14.75% in July 1984, and it reached 3.31% in November 2012. A significant impact of lower interest rates on society is that they enable more people to afford the purchase of a home. In the following exercise, we consider the purchase of a home that sells for $125,000. Assume that we can make a down payment of $25,000, so we need to borrow $100,000. We assume that our annual income is $34,000 and that we have no other debt. If we can afford to pay a monthly amount of $543.33, determine how much we can borrow if the term is 30 years and the interest rate is at the historic high of 14.75%. (Round your answer to the nearest dollar) S Can we afford the home? Yes No If we can afford to pay a monthly amount of $543.33, determine how much we can borrow if the term is 30 years and the interest rate is 3.31% (Round your answer to the nearest dollar) $ Can we afford the home now? Yes No How much more can you afford to borrow when the 30-year mortgage rate is at 3.31% compared to 14.75%7

Answer rating: 100% (QA)

SOLUTION To determine how much you can borrow at a given interest rate term and monthly payment we can use a mortgage calculation formula The formula to calculate the loan amount is Loan Amount Monthl... View the full answer