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What is the highest price that you can pay for a house

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Reference no: EM133111708

Question - You want to buy a house using a 15-year fixed-rate mortgage from the bank. Given your income, you are willing to pay up to $3,000 per month in monthly mortgage payments and want to borrow 70% of the house price from the bank. You have sufficient cash in your bank account to pay the remaining 30% of the house price. The monthly payments will start one month from receiving the loan and the interest rate is 4.8% per annum compounding monthly.

(a) What is the highest price that you can pay for a house?

(b) Assuming that you bought a house for the highest possible price, what is the principal left on your mortgage after 5 years?

Reference no: EM133111708

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