Giselle wants to buy a condo that has a purchase price of $163,000. giselle earns $2,986 a month and wants to spend no more than 25% of her income on her mortgage payment. she has saved up $33,000 for a down payment. giselle is considering the following loan option: 20% down, 30 year at a fixed rate of 6.25%. what modification can be made to this loan to make it a viable option, given giselle’s situation?
a.
change to a 15 year fixed loan
b.
change the interest to 5.5%
c.
change the down payment to 18% down
d.
none. this is a viable option for giselle.

The correct answer is option B : Change the interest to 5.5%

Giselle wants to buy a condo that has a purchase price of $163,000.

She earns $2,986 a month and wants to spend no more than 25% of her income on her mortgage payment.

Means the maximum she will spend is dollars.

She has saved up $33,000 for a down payment.

So, loan amount or principle will be = dollars

Giselle is considering the following loan option: 20% down, 30 year at a fixed rate of 6.25%.

Lets check the monthly payment for this option:

The EMI formula is:

p = 130000

n =

r =

Putting the values in formula we get:

= $800.43

This option is not viable.

1. Change to a 15 year fixed loan means n will be and rest values will be same.

Putting the values in formula we get,

= $1114.66

This is not viable.

b.  Change the interest to 5.5%  

Now r =

Rest will remain the same and n = 360

Putting the values in formula we get,

= $738.095

This is a viable option as EMI is less than $746.50.

C. Change the down payment to 18% down

So, p =

n =

r =

Putting the values in formula we get:

= $822.97

This is also not viable.

Therefore, the correct answer is option B : Change the interest to 5.5%

i'm pretty sure it's 477,585,296, but perhaps my math is incorrect.

pls ask