Luis wants to buy a home priced at $315,000. He plans to finance this amount less the down payment required. His mortgage payment woul

Question

Luis wants to buy a home priced at $315,000. He plans to finance this amount less the down payment required. His
mortgage payment would then be $2100. Luis has an annual income of $91,500 and $65,000 in savings. Luis has a
car payment of $370, a student loan payment of $165 and a credit card payment of $45. Use a 20% down payment
and the 28/36 ratio to determine if Luis is eligible for a loan. What would you advise him to do if he is not eligible?
Luis is eligible for a home loan; he meets all of the requirements.
b Luis is not eligible for a home loan, he should continue to save for a down payment.
C Luis is not eligible for a loan, he should look for a cheaper house,
d Luis is not eligible for a loan, he should reduce his recurring debt.
a
Please select the best answer from the choices provided

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Hưng Khoa 2 months 2021-07-31T03:02:49+00:00 2 Answers 1 views 0

Answers ( )

    0
    2021-07-31T03:04:14+00:00

    Answer:

    d Luis is not eligible for a loan, he should reduce his recurring debt

    0
    2021-07-31T03:04:42+00:00

    9514 1404 393

    Answer:

      A.  Luis is eligible for a home loan; he meets all of the requirements.

    Step-by-step explanation:

    Luis’s monthly income is $91,500/12 = $7625. The loan payment as a percentage of this income is …

      $2100/$7625 ≈ 27.54%

    This amount is less than 28%, so Luis qualifies according to the first criterion.

    __

    The total of Luis’s monthly debt payments with the loan will be …

      $2100 +370 +165 +45 = $2680

    As a percentage of his monthly income, this is …

      $2680/$7625 = 35.15%

    This amount is less than 36%, so Luis qualifies according to the second criterion.

    Luis is eligible for a home loan; he meets all of the requirements.

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