The Allens are considering buying a house and need to figure out what they can afford and what a bank will lend them. Bill’s annual income is $165,000. Their monthly mortgage payment for the house they want would be $1,650. Their annual property taxes would be $9,000. The home-owner’s insurance premium would cost them $1,100 per year. They have a $550 per month car loan. Their average monthly credit card bill is $4,800. Will the bank lend them the money to purchase the house using the back end ratio with an acceptable range of 36% or less?NO- (53.03%)

Back-end Debt to Income ratio computes all monthly payments as a % of the gross monthly income. We…

Answered: The Allens are considering buying a…

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter7: Losses—deductions And Limitations

Section: Chapter Questions

Problem 20P: Carlos opens a dry cleaning store during the year. He invests 30,000 of his own money and borrows...

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The Allens are considering buying a house and need to figure out what they can afford and what a bank will lend them. Bill’s annual income is $165,000. Their monthly mortgage payment for the house they want would be $1,650. Their annual property taxes would be $9,000. The home-owner’s insurance premium would cost them $1,100 per year. They have a $550 per month car loan. Their average monthly credit card bill is $4,800. Will the bank lend them the money to purchase the house using the back end ratio with an acceptable range of 36% or less?

NO- (53.03%)

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