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Eli is buying a townhouse that costs $276,650. He has $28,000 in savings and earns $4,475 a month. Eli would like to spend no

more than 30% of his income on his mortgage payment. Which loan option would you recommend to Eli?

a 30 year FHA, 3.5% down at a fixed rate of 6.5%

b. 30 year fixed, 5% down at a fixed rate of 6.25%

c. 30 year fixed, 6.5% down at a fixed rate of 5.75%

d. 30 year fixed, 10% down at a fixed rate of 5%

Please select the best answer from the choices provided

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Answer 1

b. 30 year fixed, 5% down at a fixed rate of 6.25%

Explanation:

Answer 2

Answer: D. 30 year fixed, 10% down at a fixed rate of 5%

Explanation:

The total cost of the house is $276,650.

He has in his savings $28,000

10% of $276,650 = $27,665. This will cover for the down payment.

His monthly income is $4,475 and he will like to spend 30% of it on his mortgage = $4,475* 30%= $1,342.50.

From the bal of mortgage =

$276,650 - $27,665 = $248,985

$248,985/ (30*12) = $691.625 $248,985* 5% /12= $1037.45

Total monthly repayment = $1037.45+ 691.63= $1729.08