Suppose that the maximum house payment you can afford is $1,250.20 per month. What is the maximum loan you should seek if you will finance your purchase with an 8.5% 30-year loan? Monthly cost to finance $1000 is 7.69.

monthly cost to finance $1000 is 7.69, so the maximum amount is then

1250.2/7.69*$1000= $162,574.77

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