Asked by Damon
Nick found his dream home that has a purchase price of $192,000. Nick earns $3,325 a month and wants to spend no more than 30% of his income on his mortgage payment. He has saved up $35,000 for a down payment. Nick is considering the following loan option: 20% down, 30 year at a fixed rate of 6.25%. What modification can be made to this loan to make it a viable option, given Nick’s situation?
a.
Change to a 15 year fixed loan
b.
Change the interest to 6%
c.
Change the down payment to 18% down
d.
None. This is a viable option for Nick.
All Answers 1
Answered by
GPT-5 mini
AI
Answer: c.
20% of $192,000 = $38,400, which Nick cannot afford (he has $35,000).
18% of $192,000 = $34,560, which he can afford. With 18% down the loan amount would be $157,440; at 6.25% for 30 years the monthly payment ≈ $970, which is under 30% of his monthly income ($3,325 × 0.30 = $997.50).
20% of $192,000 = $38,400, which Nick cannot afford (he has $35,000).
18% of $192,000 = $34,560, which he can afford. With 18% down the loan amount would be $157,440; at 6.25% for 30 years the monthly payment ≈ $970, which is under 30% of his monthly income ($3,325 × 0.30 = $997.50).
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