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Can Megan and Larry afford this home using the installment debt loan criterion? Next week, your friends Megan and Larry want to apply to the Fourth Global Bank for a mortgage loan. They are considering the purchase of a hom that is expected to cost $155,000. Given your knowledge of personal finance, they've asked for your help in completing the Home Affordability Worksheet that follows. To assist in the preparation of the worksheet, Megan and Larry also collected the following information: Their financial records report a combined gross before-tax annual income of $105,000 and current (pre-mortgage) installment loan, credit card, and car loan debt of $1,531 per month. . Their property taxes and homeowner's insurance policy are expected to cost $1,550 per year. Their best estimate of the interest rate on their mortgage is 7.5%, and they are interested in obtaining a 15-year loan. They have accumulated savings of $38,500 that can be used to satisfy the home's down payment and closing costs. The lender requires a minimum 20% down payment, and installment loan affordability ratios that range from a minimum of 33% to a maximum of 38%. Use either the table of monthly payments (necessary to repay a $10,000 loan), your financial calculator, or the maximum affordable mortgage loan formula to complete the following home affordability worksheet. (Note: When completing the form, round each dollar amount to the nearest whole dollar. Unless labeled differently, all of the following values represent dollar amounts. Also, some values calculated or used in the upper section or table may also be used in the lower section. Round your percentage answer to two decimal places.) Monthly Payments Factors Maximum Affordable Mortgage Loan Formula Monthly Payments Factors Maximum Affordable Mortgage Loan Formula 25 Years Interest Rate (%) 5.0 5.5 Loan Maturity 15 Years 20 Years 79.0794 65.9956 81.7083 68.7887 58.4590 10 Years 106.0655 108.5263 111.0205 113.5480 116.1085 30 Years 53.6822 56.7789 59.9551 61.4087 6.0 84.3857 71.6431 64.4301 6.5 87.1107 74.5573 67.5207 63.2068 7.0 89.8828 77.5299 70.6779 66.5302 7.5 118.7018 92.7012 80.5593 73.8991 8.0 95.5652 77.1816 8.5 98.4740 121.3276 123.9857 126.6758 129.3976 9.0 69.9215 73.3765 76.8913 80.4623 84.0854 87.7572 83.6440 86.7823 89.9726 93.2131 96.5022 101.4267 80.5227 83.9196 87.3697 90.8701 9.5 104.4225 10.0 132.1507 107.4605 Home Affordability Worksheet Based on Installment Payments and Monthly Income 1. Annual income High Value Low Value High Value Low Value Amount % 38% 33% Based on Installment Payments and Monthly Income 1. Annual income 2. Monthly income 3. Existing monthly installment payments 4. Existing monthly installment payments as percentage of monthly income (%) 5. Lender's monthly installment loan affordability ratio 6. Maximum amount of total affordable installment debt 7. Maximum monthly mortgage payment (PITI) affordable based on installment loan ratio 8. Estimated monthly property tax and insurance payment 9. Maximum monthly loan payment (P and I only) 10. Expected interest rate 11. Planned loan maturity (years) 12. Mortgage payment factor per $10,000 (from the Loan Maturity table) 13. Maximum loan based on mortgage payment factor (from the Loan Maturity table) 14. Required (20%) down payment 15. Maximum home price based on installment loan ratio 7.5% 15 Il Given these results, which statement regarding Megan and Larry's mortgage qualification process and the purchase of their $155,000 target home true? Megan and Larry do not qualify to purchase their $155,000 target home according to the installment Debt Affordability Worksheet criterion Megan and Larry quality to purchase their $155.000 target home according to the installment Debt Affordability Worksheet criterion. % 38% 33% 4. Existing monthly installment payments as percentage of monthly income (%) 5. Lender's monthly installment loan affordability ratio 6. Maximum amount of total affordable installment debt 7. Maximum monthly mortgage payment (PITI) affordable based on installment loan ratio 8. Estimated monthly property tax and insurance payment 9. Maximum monthly loan payment (P and I only) 10. Expected interest rate 11. Planned loan maturity (years) 12. Mortgage payment factor per $10,000 (from the Loan Maturity table) 13. Maximum loan based on mortgage payment factor (from the Loan Maturity table) 14. Required (20%) down payment 15. Maximum home price based on installment loan ratio 7.5% 15 Given these results, which statement regarding Megan and Larry's mortgage qualification process and the purchase of their $155,000 target home is true? Megan and Larry do not quality to purchase their $155,000 target home according to the installment Debt Affordability Worksheet criterion. Megan and Larry qualify to purchase their $155,000 target home according to the installment Debt Affordability Worksheet criterion