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How would this affect the price range of houses

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Question: PURCHASING A HOME Refer to Exercise. If local mortgage rates were increased to 8%, how would this affect the price range of houses that the Johnsons should consider?

Exercise: PURCHASING A HOME The Johnsons have accumulated a nest egg of $40,000 that they intend to use as a down payment toward the purchase of a new house. Because their present gross income has placed them in a relatively high tax bracket, they have decided to invest a minimum of $2400/month in monthly payments (to take advantage of the tax deduction) toward the purchase of their house. However, because of other financial obligations, their monthly payments should not exceed $3000. If local mortgage rates are 7.5%/year compounded monthly for a conventional 30-yr mortgage, what is the price range of houses that they should consider?

Reference no: EM131556476

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