Estimate the affordable monthly mortgage payment, the affordable mortgage amount, and the affordable home purchase price for the following situation. (Refer to Exhibit 9-8 and Exhibit 9-9) (Round time value factor to 2 decimal places, intermediate and final answers to the nearest whole dollar.) Monthly gross income $ 4,700
Down payment to be made (percent of purchase price) 20 percent
Other debt (monthly payment) $ 260
Monthly estimate for property taxes and insurance $ 490
30-year loan 8.5 percent
Affordable monthly mortgage payment $
Affordable mortgage amount $
Affordable home purchase $

Explanation:

NOTE: According to the Principal interest tax rate and insurance guide, the lender makes use of 38 % of monthly gross as guidelines.

Affordable monthly mortgage Payment = (Monthly gross income × 0.38) - other debt - Monthly estimate of property taxes  insurance)

= (4700 × 0.38) -260 - 490

= $1036

Affordable mortgage amount = affordable monthly mortgage payment / mortgage payment factor at 8.5 % for 30 yr loan) × 100

The Value of the mortgage payment factor which is taken from exhibit 9 - 9 is 7.69

= ($1036 / 7.69)  × 1000

= $134720.4

= $135000 to the nearest whole dollar

= $168750

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c is the correct answer.