Problem1. You desire to buy a home for $239,950 and have saved sufficient for a 20 percent down payment. The mortgage interest rate is 5.25 percent with for the 30 year loan with monthly payments. You earn $65,000 each year from all sources and have existing debt (student loans, credit card payments, car payment, and so on.) of $600 per month. The total debt ratio is 36 percent.
Do you eligible to buy this property?
Problem2. You have found your dream home the buying price is $275,000 and you have saved sufficient to cover your closing costs as well as a 20 percent down payment. The Virginia Credit Union is willing to provide you 80 percent of the purchase price with an interest rate of 4.75 percent amortized over the 30 year period with monthly payments, provided that your totalling housing cost doesn’t exceed 28 percent of your income and your total debt doesn’t exceed 36 percent of your income. Real estate taxes are 1 percent of the buying price, insurance is $900 per year and homeowner’s association dues are $200 per month. Your yearly earned income is $68,000 and you have income from other sources (investments, bonds, stocks, CDs, and so forth.) of $4,500 each year. Your other debt (student loans, credit cards, car payment, and so forth.) obligate you to pay $800 each month.
Do you eligible to buy the house?