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How much can kelly afford to pay monthly for her house

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Question: Kelly is looking at purchasing her first house and is concerned with how much she is able to afford. Assume she makes $84,000/yr in gross annual income (before taxes) and pays 25% in combined state and federal taxes at her marginal tax rate. Kelly has a student loan of $40,000 with monthly payments of $125 and she also has a $30,000 Honda Accord and pays $275/mo for her car loan. Assume the 28 percent PITI affordability guideline and the 36 percent total debt obligation guideline from the book when answering the below questions.

a) How much can Kelly afford to pay monthly for her house (including mortgage payment, property taxes, and insurance)?

b) If Kelly pays off her car loan and student loan, how much more will she be able to put towards the monthly payment for her house?

Reference no: EM132748129

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