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Eli is buying a townhouse that costs $276,650. He has $28,000 in savings and earns $4,475 a month. Eli would like to spend no

more than 30% of his income on his mortgage payment. Which loan option would you recommend to Eli?

a 30 year FHA, 3.5% down at a fixed rate of 6.5%

b. 30 year fixed, 5% down at a fixed rate of 6.25%

c. 30 year fixed, 6.5% down at a fixed rate of 5.75%

d. 30 year fixed, 10% down at a fixed rate of 5%

Please select the best answer from the choices provided

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D. 30 year fixed, 10% down at a fixed rate of 5%

Step-by-step explanation:

The total cost of the house is $276,650.

He has in his savings $28,000

10% of $276,650 = $27,665. This will cover for the down payment.

His monthly income is $4,475 and he will like to spend 30% of it on his mortgage = $4,475* 30%= $1,342.50.

From the bal of mortgage =

$276,650 - $27,665 = $248,985

$248,985/ (30*12) = $691.625 $248,985* 5% /12= $1037.45

Total monthly repayment = $1037.45+ 691.63= $1729.08

b. 30 year fixed, 5% down at a fixed rate of 6.25%

Step-by-step explanation:

answer: the value should be used for i in the formula of calculation the monthly payment , the interest rate per period is 0.85.

step-by-step explanation:

the given rate of interest i= 85%

in calculating the monthly payment for a loan with an interest rate compounded monthly, the value of the interest rate per period we use in the formula must be in decimal form.

to convert it in decimal, we divide it by 100, we get

hence, the value should be used for i in the formula of calculation the monthly payment , the interest rate per period is 0.85.