Question

you want to buy a house and can afford a monthly mortgage payment of $850 you plan to take out a 20-year loan. The current available rate is an APR of 3.72% whatever you're more mortgage Lender predicts that the rate could rise to 4.22 % in the near future. If the APr rises from 3.72 % to 4.22 % will the maximum loan amount that you can afford increase or decrease by how many dollars question if the APR rises from 3.72 % to 4.22 % the maximum loan amount that you can afford will decrease by

Answer 1

Step-by-step explanation:

For a payment of 3.72% per month, the amount after 20 years is:

(850 * 20*12) + (0.0372*8500*20*12)

= $211,588.8

This is the amount affordable

For a rate of 4.22%, we have:

If the rate rises from 3.72% to 4.22%, then

(850 * 20*12) + (0.0422*8500*20*12)

= $212,608.8

The amount by which the loan increases is:

$212,608.8 - $211,588.8 = $1020