Suppose you take out a 20-year mortgage for a house that costs $399,842. Assume the following: The annual interest rate on the mortgage is 4%. The bank requires a minimum down payment of 16% at the time of the loan. The annual property tax is 2.1% of the cost of the house. The annual homeowner's insurance is 0.6% of the cost of the house. The monthly PMI is $85 Your other long-term debts require payments of $505 per month. If you make the minimum down payment, what is the minimum gross monthly salary you must earn in order to satisfy the 28% rule and the 36% rule simultaneously?

Suppose you take out a 20-year mortgage for a house that costs $399,842. Assume the following: The annual interest rate on the mortgage is 4%. The bank requires a minimum down payment of 16% at the time of the loan. The annual property tax is 2.1% of the cost of the house. The annual homeowner's insurance is 0.6% of the cost of the house. The monthly PMI is $85 Your other long-term debts require payments of $505 per month. If you make the minimum down payment, what is the minimum gross monthly salary you must earn in order to satisfy the 28% rule and the 36% rule simultaneously?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter22: Providing And Obtaining Credit

Section: Chapter Questions

Problem 2P: Cost of Bank Loan Mary Jones recently obtained an equipment loan from a local bank. The loan is for...

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Del Hawley, owner of Hawleys Hardware, is negotiating with First City Bank for a 1-year loan of 50,000. First City has offered Hawley the alternatives listed here. Calculate the effective annual interest rate for each alternative. Which alternative has the lowest effective annual interest rate? a. A 12% annual rate on a simple interest loan, with no compensating balance required and interest due at the end of the year b. A 9% annual rate on a simple interest loan, with a 20% compensating balance required and interest due at the end of the year c. An 8.75% annual rate on a discounted loan, with a 15% compensating balance d. Interest figured as 8% of the 50,000 amount, payable at the end of the year, but with the loan amount repayable in monthly installments during the year
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Cost of Bank Loan Mary Jones recently obtained an equipment loan from a local bank. The loan is for 15,000 with a nominal interest rate of 11%. However, this is an installment loan, so the bank also charges add-on interest. Mary must make monthly payments on the loan, and the loan is to be repaid in 1 year. What is the effective annual rate on the loan (assuming a 365-day year)?
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