Answer:
Affordable home purchase price of Michelle Duncan is $133,958.
Explanation:
Determine the monthly gross income (annual income divided by 12).
$52,200/12 = $4,350
With a down payment of at least 3.5 percent, lenders use 33 percent
of monthly gross income as a guideline for PITI (principal, interest,
taxes, and insurance) and 38 percent of monthly gross income as a
guideline for PITI plus other debt payments.
4350 * 0.38 = $1,653
Subtract other debt payments and monthly costs of property taxes and homeowner’s insurance.
$1,653 - 760 - 250 = $643
Divide this amount by the monthly mortgage payment per $1,000 based on current mortgage rates
($643/6.00) x $1,000 = $107,166
Divide your affordable mortgage amount by 1 minus the fractional portion of the down payment
$107,166/(1 - 0.2) = $133,958
Affordable home purchase price of Michelle Duncan is $133,958.
Michelle's affordable home purchase price is $133,958.33.
Monthly income = $52,200/12 months
Monthly income = $4,350
Mandatory expense at 38% rule = $4,350x 0.38
Mandatory expense at 38% rule =$1,653
Balance left= $1,653 - $760 - $250
Balance left= $643
Mortgage payment = ($643/6.00) x 1000
Mortgage payment = $107,167
Purchase price = Monthly payment/ 1- Percentage of down payment
Purchase price= $107,167/1 - 0.20
Purchase price= $107,167/0.80
Purchase price= $133,958.33
Inconclusion Michelle's affordable home purchase price is $133,958.33.
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