Review this, this is the FINAL answer :) thank you
Review Exhibit 7-4 in Ch. 7, page 225 of Focus on Personal Finance.
Review Exhibit 7-6 in Ch. 7, page 230 of Focus on Personal Finance.
If you were buying a home valued at $215,000, what is the minimum down payment
you would need in order to avoid paying private mortgage insurance (PMI)? PMI is
requested to protect the lender from potential default loss when there is insufficient
equity in a home.
It is recommended by the financial advisors that mortgage payment should not be more than 28%
of individual’s monthly household income. Considering that fact, minimum payment requires a
down payment of less than 20% which often requires PMI and in return it will increase their
monthly payment. For a $250,000 home, the minimum down payment of 20% will be $43,000.
Debt payments-to-income ratios will likely be considered as you apply for a mortgage.
The Focus on Personal Finance text suggests keeping this ratio below 20%. A
mortgage lender will have their own ratio for all debt payments, including mortgageto-income ratio, before they will consider approval. Using this information, answer the
questions and show your calculations in the ...