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Can Clancy and Eileen afford this home using the installment debt loan criterion? Next week, your friends Clancy and Eileen want to apply to the Fifth State Bank for a mortgage loan. They are considering the purchase of a home that is expected to cost $215,000. 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, Clancy and Eileen also collected the following information: . Their financial records report a combined gross before-tax annual income of $85,000 and current (pre-mortgage) installment loan, credit card, and car loan debt of $1,240 per month. Their property taxes and homeowner's insurance policy are expected to cost $2,150 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 $50,500 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 of the table may also be used in the lower section. Round your percentage answer to two decimal places.) Home Affordability Worksheet Based on Installment Payments and Monthly Income High Value Low Value Amount 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 38% 33% 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 7.5% 11. Planned loan maturity (years) 15 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 Given these results, which statement regarding Clancy and Eileen's mortgage qualification process and the purchase of their $215,000 target home is true? Clancy and Eileen do not qualify to purchase their $215,000 target home according to the Installment Debt Affordability Worksheet criterion. Clancy and Eileen qualify to purchase their $215,000 target home according to the Installment Debt Affordability Worksheet criterion Can Clancy and Eileen afford this home using the installment debt loan criterion? Next week, your friends Clancy and Eileen want to apply to the Fifth State Bank for a mortgage loan. They are considering the purchase of a home that is expected to cost $215,000. 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, Clancy and Eileen also collected the following information: . Their financial records report a combined gross before-tax annual income of $85,000 and current (pre-mortgage) installment loan, credit card, and car loan debt of $1,240 per month. Their property taxes and homeowner's insurance policy are expected to cost $2,150 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 $50,500 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 of the table may also be used in the lower section. Round your percentage answer to two decimal places.) Home Affordability Worksheet Based on Installment Payments and Monthly Income High Value Low Value Amount 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 38% 33% 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 7.5% 11. Planned loan maturity (years) 15 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 Given these results, which statement regarding Clancy and Eileen's mortgage qualification process and the purchase of their $215,000 target home is true? Clancy and Eileen do not qualify to purchase their $215,000 target home according to the Installment Debt Affordability Worksheet criterion. Clancy and Eileen qualify to purchase their $215,000 target home according to the Installment Debt Affordability Worksheet criterion