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What is the maximum amount of mortgage you can afford

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Question - You want to buy a house in 5 years. Based on your income, the maximum payment you can budget for your mortgage payments after you buy the house are $2000 per month. Based on the current interest rates, you believe that you can get a 30-year, monthly payment mortgage for your house at 5% APR.

What is the maximum amount of mortgage you can afford to take based on your income?

You are planning to save $80,000 for a down payment in 5 years. Assuming, you invest your savings in your investment account that earns on average 10% return in a year, how much monthly contribution would you have to make to your investment account in order to be able to save your down payment in 5 years?

You already have $25,000 saved in your investment account. How much would your monthly contributions have to be, under this condition, in order to save your down payment in 5 years?

If you can save your $80,000 down payment in 5 years, and based on the mortgage amount calculated in Part 1 (assuming there are no extra costs like sales taxes...etc), what is the maximum value of the house you can afford?

Reference no: EM132893875

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