Mr. J has accumulated $26,000 that he intend to use as a down payment toward the purchase of a new house. Because his present gross income has placed him in a relatively high tax bracket, he has decided to invest a minimum of $1000/month in monthly payments (to take advantage of the tax deduction) toward the purchase of his house. However, because of other financial obligations, his monthly payments should not exceed $1300. If local mortgage rates are 9.5%/year compounded monthly for a conventional 30-year mortgage, what is the price range of houses they should not exceed $1300. Price range?

Question

anonymous · Answer

Uh, I don't know if I did this right... I took his monthly mortgage budget and divided it by the the interest rate to find the full value of the home with that budget. 1300/.095 = 136,842.11.

From there, add in his down payment. 136,842.11+26,000=162,842.11

So, Mr. J can afford a home that is about $162,842.11

anonymous · Answer

i need to get a range.

anonymous · Answer

Well, with that information, you know that Mr. J will go over his budget if the house exceeds 162,842.11.

anonymous · Answer

if anybody knows the formula to do this, that is all I need. Thank you.