2 Assume that you can get an interest-only mortgage with no money down. You areconsidering to buy a house or to rent an apartment. The apartment rents for $900 permonth. You estimate the monthly property tax to be $200 and the monthly intereston your interest-only loan to be $750. Your tax rate is 20%. You also have to pay $75per month in maintenance costs and $125 per month in property insurance if youown. Should you buy the house or rent the apartment based on these numbers,assuming that you cannot make a profit from the sale of the property? (Also, ignore allemotional factors and assume that you can itemize all your deductions.)You are indifferent because the two options cost exactly the same per month.You should rent because the $900 rent is less than the monthly cost town.You should rent because the $900 rent is more than the monthly cost to own.You should buy because buying is financially always the better option.re What is the mortgage debt ratio for a potential borrower who earns $72,000 per yearif she applies for a mortgage that requires principal and interest payments of $1,800per month, the property taxes of the house she wants to buy are $400 per month, andthe property insurance is $150 per month.30%27%39%40%

Calculation for mortgage debt ratio are as follows.

Answered: What is the mortgage debt ratio for a…

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter6: Using Credit

Section: Chapter Questions

Problem 2FPE

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