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?

Answers:

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.

Question

Mathematics

Joyce Wilcox

19 June, 09:45

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?

Answers:

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.

+3

Answers (1)

Know the Answer?

Keely Rasmussen · Answer 1

Nick has $35,000 available money for the down payment of his dream home which costs $192,000. He is entertaining a 20% down payment option with 6.25% fixed rate for 30 years. 20% of $192,000 is $38,400 which is more than what he has now ($35,000). Option c is considered since it brings down the down payment to 18% of the total cost which will only be $34,560 and is less than what he has now. This is the most logical option considering the money he has now.