Determining the maximum loan amount plus

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Reference no: EM132466183

A chart to determine:

1) Monthly Escrow Payment: the monthly escrow payment is (yearly insurance cost plus the yearly real estate taxes) divided by 12 months.

2) Monthly Principal and Interest Payment: the monthly principal and interest payment is the desired monthly payment minus the monthly escrow payment.

3) Maximum Loan Amount: use the PV function to calculate the maximum loan amount you can cover given your desired monthly payment, interest rate, and years financed. The future value of the loan would be zero because you plan on fully paying off the loan at the end of the term.

a. NOTE: Use the Monthly Principal and Interest Payment as the PMT input in the PV function because the Monthly Escrow Payment doesn't go toward the Loan.

4) Maximum House Price including Closing Costs: the maximum house price is the maximum loan amount plus the available down payment

Reference no: EM132466183

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