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Maximum Mortgage Loans: A Case Study

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As shown above, using a maximum ratio of 28% to measure the PITI to Monthly gross income my maximum mortgage loan calculated is showing $181,818.Lenders usually measure your ability to pay through the use of ratio by limiting your monthly housing cost, as measured by PITI, to 28% of your gross monthly (Keown,2007). Conversely, employing the use of the 36% rule, which says that your total debt payments should never add up to more than 36% of your gross (i.e. pre-tax) income. In practice, that means that for every pre-tax dollar you earn each month, you should dedicate no more than 36 cents to paying off your mortgage, student loans, credit card debt and so on (SmartAsset.com, n.d). My maximum mortgage loan level following the 36% rule is $ only
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10 = Number of periods 2%= Interest rate per period 1. 21899= The corresponding value 1.21899 x 150,000 = 182,848.50= multiply The loan Future Value is: 182,848.50; Rounded: 182,849 Principal: 150,000 Rate: 4% divided by 2=2% Number of periods: 2x5= 10 150,000 (1 + .002) ^ 10 = 153027.145 or 153027.15 Rounded 153,027.15 – 150,000= 3,027.15 I=PRT= $200,000 x .006 x 28 = $33,600 236,468.44 - 200,000 =36,46 200,000divided by100

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