## 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

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

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

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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.

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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.