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A lender will grant an $80$ $\%$ loan on a home with an appraised value of $\$328,400$ at $4$ . $75$ $\%$ annual interest for $15$ years. The monthly payment will require $\$7.78$ per $\$1,000$ of loan amount. How much verifiable monthly gross income must the borrowers earn if the lender permits them to devote $29$ $\%$ of gross monthly income to the principal and interest payment?

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Finance problems

Full solution

Q. A lender will grant an

80

\%

loan on a home with an appraised value of

\$328,400

at

4

.

75

\%

annual interest for

15

years. The monthly payment will require

\$7.78

per

\$1,000

of loan amount. How much verifiable monthly gross income must the borrowers earn if the lender permits them to devote

29

\%

of gross monthly income to the principal and interest payment?

Calculate Loan Amount: Calculate the loan amount based on the appraised value of the home. $\newline$ Loan amount = $80$ % of $\$328,400$ $\newline$ Loan amount = $0.80 \times 328400$ $\newline$ Loan amount = $\$262,720$
Determine Monthly Payment: Determine the monthly payment using the rate per $\$$ $1$ , $000$ of loan amount. $\newline$ Monthly payment per $\$$ $1$ , $000$ = $\$7.78$ $\newline$ Total monthly payment = $(\$262,720 / \$1,000) * \$7.78$ $\newline$ Total monthly payment = $262.72 * 7.78$ $\newline$ Total monthly payment = $\$2044.58$
Calculate Required Income: Calculate the required gross monthly income. $\newline$ Percentage of income allowed for payment = $29\%$ $\newline$ Required gross monthly income = Total monthly payment / $29\%$ $\newline$ Required gross monthly income = $\$2044.58 / 0.29$ $\newline$ Required gross monthly income = $\$7050.27$

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