Su has paid off her student loans, and now would like to buy property costing $1
ID: 2658368 • Letter: S
Question
Su has paid off her student loans, and now would like to buy property costing $160,500. She has in her cheking account $1000, and $5000 in a saving account. She also has shares in a company that were a gift to her as a child, and which she is willing to sell. At current market prices, she calculates those shares are worth $20,000. Her annual salary is $45,000 and she expeccts to keep hre job, with annual raises of between 3% and 5%
a- Given that the checking account money is needed for day-to-day expenses, how much does Su have for a down payment on a house?
b- The bank she goes to for a mortgage advises her that they only approve a mortgage that is no more than 2.5 times one year of the borrower's salary, and that she must come up with more for the down payment if they are to approve the loan. What is the total amount Su would need for a down payment to satisfy the bank's requirements? How much moer must she save before she has enough?
Explanation / Answer
Su possible downpayment = 5000 + 20000 = $25000; Hence she would require a loan of = (160500-25000) = $135,500
Max loan that the Bank will approve = 2.5 * 45000 = $ 112,500
At this level , the down payment required will be = (160500-112500) = 48000
Su is short by = (48000 - 25000) = $ 23000 which is the amount she needs to save before she can avail loan .