Tom and Karen are looking to purchase their first home. They have saved $30 000.00 but...

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Tom and Karen are looking to purchase their first home. They have saved $30 000.00 but only wish to put down the minimum down payment required as they need to have a little extra cash for moving expenses, legal fees etc. Their realtor has recommended they go to their bank to understand how much they can afford. They have found their dream home, a 1700 square foot starter home in Whitby listed for $ 425 000.00 (What a deal!). Property taxes on the property are $3000.00, heat is estimated at $100/month and utilities are estimated at $100/month. Tom has advised the bank that he makes $45 000.00 annually from his full time job plus an extra $10 000.00 he makes doing side jobs he does not declare on his income taxes. Karen earns an annual salary of $38 000. The couple wishes to select the maximum allowable amortization period with a 5 year term at a rate of 3.09 %. The Bank has advised the couple that they will need CMHC default insurance which is 4%, because they are only putting down the minimum payment. 1. What is the amount of the minimum down payment they need to make to purchase the house? k 2. What is the total amount they will be financing on the mortgage? 3. What is their gross monthly income to use in the calculation of GDSR? 4. Select the mortgage payment plus interest from the table below using the most appropriate calculation. Calculate the couple's GDSR. SHOW YOUR WORK. 5. Based on the GDSR, would you approve Tom & Karen for the mortgage? Why/why not? Mortgage Amount Rate Amortization Monthly Payment. Principle Interest 425 000.00 410 800.00 419 900.00 403 750.00 3.09% 25 Years 25 Years 3.09% 3.09% 3,09% 25 Years 25 Years 2030.97 1963.11 2006.60 1929.42 Tom and Karen are looking to purchase their first home. They have saved $30 000.00 but only wish to put down the minimum down payment required as they need to have a little extra cash for moving expenses, legal fees etc. Their realtor has recommended they go to their bank to understand how much they can afford. They have found their dream home, a 1700 square foot starter home in Whitby listed for $ 425 000.00 (What a deal!). Property taxes on the property are $3000.00, heat is estimated at $100/month and utilities are estimated at $100/month. Tom has advised the bank that he makes $45 000.00 annually from his full time job plus an extra $10 000.00 he makes doing side jobs he does not declare on his income taxes. Karen earns an annual salary of $38 000. The couple wishes to select the maximum allowable amortization period with a 5 year term at a rate of 3.09 %. The Bank has advised the couple that they will need CMHC default insurance which is 4%, because they are only putting down the minimum payment. 1. What is the amount of the minimum down payment they need to make to purchase the house? k 2. What is the total amount they will be financing on the mortgage? 3. What is their gross monthly income to use in the calculation of GDSR? 4. Select the mortgage payment plus interest from the table below using the most appropriate calculation. Calculate the couple's GDSR. SHOW YOUR WORK. 5. Based on the GDSR, would you approve Tom & Karen for the mortgage? Why/why not? Mortgage Amount Rate Amortization Monthly Payment. Principle Interest 425 000.00 410 800.00 419 900.00 403 750.00 3.09% 25 Years 25 Years 3.09% 3.09% 3,09% 25 Years 25 Years 2030.97 1963.11 2006.60 1929.42

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1 To calculate the amount of the minimum down payment they need to make to purchase the house we need to determine the minimum down payment percentage ... View the full answer