The Ability-to-Repay Rule, adopted by the Consumer Financial Protection Bureau in compliance with the Dodd-Frank Wall Street Reform and Consumer Protection Act, requires lenders to determine whether a consumer applying for a Qualified Mortgage can afford to repay the loan. One of the requirements is that the borrower's total monthly debt (including property taxes) cannot exceed 43% of the borrower's monthly pre-tax income.† Suppose that the Foleys have applied for a $400,000 Qualified Mortgage with an interest rate of 6%/year compounded monthly and a term of 30 years. The property tax on the home they wish to purchase is $6000/year. If the Foleys' annual income is $72,000, will they qualify for the mortgage? (Round your answers to two decimal places.) The Foley's monthly payment would be $ _________ . Their monthly income is $ _______. Thus, provided they do not have other significant debts, the Foley's (Qualify/Not Qualify) for the mortgage.
The Ability-to-Repay Rule, adopted by the Consumer Financial Protection Bureau in compliance with the Dodd-Frank Wall Street Reform and Consumer Protection Act, requires lenders to determine whether a consumer applying for a Qualified Mortgage can afford to repay the loan. One of the requirements is that the borrower's total monthly debt (including property taxes) cannot exceed 43% of the borrower's monthly pre-tax income.† Suppose that the Foleys have applied for a $400,000 Qualified Mortgage with an interest rate of 6%/year compounded monthly and a term of 30 years. The property tax on the home they wish to purchase is $6000/year. If the Foleys' annual income is $72,000, will they qualify for the mortgage? (Round your answers to two decimal places.)
The Foley's monthly payment would be $ _________ . Their monthly income is $ _______. Thus, provided they do not have other significant debts, the Foley's (Qualify/Not Qualify) for the mortgage.
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