# Lost in Mat 126 - MAT 126 week 4 discussion 1

This is MAT 126 week 4 discussion 1 from the Ashford University link. The first three letters of my last name is WHI.This is figuring percentage of DTI.

### Comments for Lost in Mat 126 - MAT 126 week 4 discussion 1

 Feb 14, 2012 MAT 126 week 4 discussion 1 by: Staff ----------------------------------------------------------------- Part III What is the total purchase price you can you afford for a home? Mathematics in Our World Revisited How Much Can You Afford to Pay for a Home? ▲ Experts suggest that a person can afford to pay 28% of his or her gross monthly income for a home mortgage. Given this assumption and using Table 9-1 on page 435, you can ﬁgure out how much you can afford to pay for a home, as shown. 28% of gross monthly income = .28*\$5,000 = \$1,400.00 You can afford a monthly mortgage payment of \$1,400.00 Now to see what you can afford to borrow, look up the number corresponding to 7% and 25 years in Table 9-1 on page 435. It is 7.70. Set up an equation and solve for x. 7.70x = \$1,400.00 X = \$1,400.00/7.70 = 181.818 You can afford a mortgage of 181.818*1000 = \$181,818 You can afford a mortgage of \$181,818 Finally, add your down payment of \$15,000 \$181,818 + \$15,000 = \$196,818 Can purchase a home costing about \$196,818 Would this amount allow you to purchase a home in the area where you live? Ashford University is located in Clinton, IA 52732. However, your ISP indicates that you access the internet from LIVINGSTON, NEW JERSEY (zip code: 07039). I’ll assume you live in Livingston when answering this question. The answer is: No Homes in Livingston, New Jersey are very expensive. Most of the homes are out of the price range for someone earning \$60,000 per year if they must pay 7% interest for a 25 year loan with a \$15,000 down payment (per this problem statement). However, current interest rates are in the 4% range (much lower than 7% indicated in the problem statement). In addition, there are many foreclosures in Livingston. As lenders and other sellers become more and more desperate, they are likely to lower the asking price. This could make it possible for someone earning \$60,000 per year to purchase a home in Livingston. Current listings are available on Zillow: http://www.zillow.com/homes/07039_rb/ Thanks for writing. Staff www.solving-math-problems.com

 Feb 14, 2012 MAT 126 week 4 discussion 1 by: Staff ----------------------------------------------------------------- Part II Calculate your monthly income. (Yearly income)/(12 months) = \$60,000/(12 months) = \$5,000 per month What percent of your monthly income is the car payment? [(Monthly car payment)/(Monthly income)] * 100 = % car payment (\$283.15/\$5,000)*100 = 5.663 % The monthly car payment is 5.7% of the monthly income Subtract the sum of your monthly expenses. \$5,000 per month, monthly income -\$283.15 per month, Car payment -\$72 per month, Car insurance -\$242.77 per month, Utilities (includes water and power) -\$32 per month, Internet -\$79.95 per month, Cell Phone -------------------------------------- \$4,290.13 per month (monthly income after monthly expenses, without educational expenses) If educational expenses are included: \$4,290.13 per month -\$665 per month, educational expenses -------------------------------------- \$3,625.13 per month (monthly income after monthly expenses, including educational expenses) --------- Calculate what percent of your income is now available to spend for food, clothing, and your rent or mortgage. [(Monthly income after payments)/(Monthly income)] * 100 = % available Without including educational expenses (\$4,290.13 /\$5,000)*100 = 85.8026% Available income is 85.8% of the monthly income. Including educational expenses (\$3,625.13 /\$5,000)*100 = 72.5026% Available income is 72.5% of the monthly income. Assume you can afford a down payment equal to 25% of your yearly income. \$60,000 * .25 = \$15,000 down payment -----------------------------------------------------------------