Lucy wants to purchase a home and has approached a bank and been informed that a 30 year mortgage loan with monthly payments and compounding would have an APR of 5.4 %. She has saved enough to put down 20% for the purchase and will finance the other 80%. Given her income level, she feels that she can afford a monthly house payment of $800.
1. How much money will she be able to borrow from the bank?
2. How much can she afford to pay for the home?
To find the answer with a financial calculator, you first need to identify each variable given in the problem. The number of periods is 30 years x 12 ...
This solution provides steps necessary to calculate mortgage loans using a financial calculator.