The Johnsons have accumulated a nest egg of $25,000 that they intend to use as a down payment toward the purchase of a new house. Because their present gross income has placed them in a relatively high tax bracket, they have decided to invest a minimum of $1,000/month in monthly payments (to take advantage of their tax deductions) toward the purchase of their house. However, because of other financial obligations, their monthly payments should not exceed $1,800. If local mortgage rates are 9.5%/year compounded monthly for a conventional 40-year mortgage, what is the price range of houses that they should consider?If the Johnsons decide to secure a 20-year mortgage instead of a 40-year mortgage, what is the price range of houses they should consider when the local mortgage rate for this type of loan is 9%?
The Johnsons have accumulated a nest egg of $25,000 that they intend to use as a down payment toward the purchase of a new house. Because their present gross income has placed them in a relatively high tax bracket, they have decided to invest a minimum of $1,000/month in monthly payments (to take advantage of their tax deductions) toward the purchase of their house. However, because of other financial obligations, their monthly payments should not exceed $1,800. If local mortgage rates are 9.5%/year compounded monthly for a conventional 40-year mortgage, what is the price range of houses that they should consider?If the Johnsons decide to secure a 20-year mortgage instead of a 40-year mortgage, what is the price range of houses they should consider when the local mortgage rate for this type of loan is 9%?
Chapter2: Gross Income And Exclusions
Section: Chapter Questions
Problem 29P
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The Johnsons have accumulated a nest egg of $25,000 that they intend to use as a down payment toward the purchase of a new house. Because their present gross income has placed them in a relatively high tax bracket, they have decided to invest a minimum of $1,000/month in monthly payments (to take advantage of their tax deductions) toward the purchase of their house. However, because of other financial obligations, their monthly payments should not exceed $1,800. If local mortgage rates are 9.5%/year compounded monthly for a conventional 40-year mortgage, what is the price range of houses that they should consider?
If the Johnsons decide to secure a 20-year mortgage instead of a 40-year mortgage, what is the price range of houses they should consider when the local mortgage rate for this type of loan is 9%?
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