Reference no: EM132558664
Question - Reagan wants to buy a condominium for $90,000. The property taxes are $1,200 per year, homeowner's insurance is $800 per year, and the monthly house loan payments would be $434.83. Reagan's gross monthly income is $3335. She has monthly car loan payments of $250, and monthly student loan payments of $200. She has no other loan payments. The bank is requiring a 10% down payment. Her bank will approve the loan if the total of her monthly loan payment, insurance payment, and property taxes are less than 25% of her adjusted monthly income.
Q1. Determine 25% of Reagan's adjusted monthly income. Assume adjusted monthly income is gross income minus any non-home related loan payments.
a. $115.40
b. $679.58
c. $721.25
d. $2885
Q2. Determine Reagan's total monthly home-related expenses (loan payment, insurance, and taxes) and determine whether the bank will approve the loan.
a. Reagan's monthly home-related expenses would be $601.50 and the bank will approve the loan.
b. Reagan's monthly home-related expenses would be $601.50 and the bank will not approve the loan.
c. Reagan's monthly home-related expenses would be $2434.83 and the bank will approve the loan.
d. Reagan's monthly home-related expenses would be $2434.83 and the bank will not approve the loan.
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