2. Mortgage Affordability. Seth and Alexandra Moore of Elk Grove Village, Illinois, have an annual income...

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2. Mortgage Affordability. Seth and Alexandra Moore of Elk GroveVillage, Illinois, have an annual income of $110,000 and want tobuy a home. Currently, mortgage rates are 5 percent. The Mooreswant to take out a mortgage for 30 years. Real estate taxes areestimated to be $4,800 per year for homes similar to what theywould like to buy, and homeowner's insurance would be about $1,500per year.
(a) Using a 28 percent front end ratio, what are the totalmonthly expenditures for which they would qualify?
(b) Using a 36 percent back-end ratio, what monthly mortgagepayment (including taxes and insurance) could they afford giventhat they have an automobile loan payment of $470, a student loanpayment of $350, and credit card payments of $250?
(c) Using a 36 percent back-end ratio, if the Moores had zerodebt, what monthly mortgage payment (including taxes and insurance)could they afford?

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2. Mortgage Affordability. Seth and Alexandra Moore of Elk GroveVillage, Illinois, have an annual income of $110,000 and want tobuy a home. Currently, mortgage rates are 5 percent. The Mooreswant to take out a mortgage for 30 years. Real estate taxes areestimated to be $4,800 per year for homes similar to what theywould like to buy, and homeowner's insurance would be about $1,500per year.(a) Using a 28 percent front end ratio, what are the totalmonthly expenditures for which they would qualify?(b) Using a 36 percent back-end ratio, what monthly mortgagepayment (including taxes and insurance) could they afford giventhat they have an automobile loan payment of $470, a student loanpayment of $350, and credit card payments of $250?(c) Using a 36 percent back-end ratio, if the Moores had zerodebt, what monthly mortgage payment (including taxes and insurance)could they afford?