SOLUTION: Sheila little has a gross monthly income of $3500. She has 15 remaining payments of $147 on a used car. The taxes and insurance on the house are $85 per month. What maximum monthly
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Question 1173049: Sheila little has a gross monthly income of $3500. She has 15 remaining payments of $147 on a used car. The taxes and insurance on the house are $85 per month. What maximum monthly payment does the banks loan officer feel that Sheila can afford?
2416.16
980.00
938.84
838.25 Answer by CPhill(1959) (Show Source):
You can put this solution on YOUR website! Here's how to solve this problem:
**1. Calculate Total Monthly Debt:**
* Car payment: $147
* Taxes and insurance: $85
* Total existing debt: $147 + $85 = $232
**2. Determine Maximum Allowable Debt:**
* A common guideline for a maximum debt-to-income ratio (DTI) is 36%.
* Maximum allowable debt: $3500 * 0.36 = $1260
**3. Calculate Maximum Monthly Payment:**
* Maximum monthly payment: $1260 - $232 = $1028
The provided answer choices do not contain the correct answer. The correct answer is 1028.00.
