1) The Tremblays have been preapproved by their bank to enter the housing market with a mortgage interest rate of 8

1) The Tremblays have been preapproved by their bank to enter the housing market with a mortgage interest rate of 8.6%. They have $30,000 set aside for a down payment. They have also calculated that they can afford a monthly payment of $1,350. They have narrowed their search to three houses and are hoping that financial constraints will narrow their choices. The three houses will cost the following amounts: $150,000, $270,000, and $400,000. The bank will add $50 to each mortgage payment if they put less than 20% down and an additional fee of $50 more to each payment if they put less than 10% down (Total 5 marks) a. Which of these houses can they afford with a 30-year mortgage? (2 marks) b. Which of these houses can they afford with a 15-year mortgage? (2 marks) I c. Which house do you think they should buy? (1 mark)
2. The Young household is looking at buying a house. The three houses they are looking at cost the following: $160,000, $190,000 and $210,000. They can pay up to $900 in monthly mortgage payments. They currently have $18,000 set aside for a down payment. Similarly to the Tremblay's bank, the Youngs' bank will add $40 to each mortgage payment if they put less than 20% down and an additional fee of $30 more to each payment if they put less than 10% down. (Total 5 marks) a. Which of these houses can they afford with a 30-year mortgage at an interest rate of 3.5%? (2 marks) b. Which of these houses can they afford with a 15-year mortgage at an interest rate of 2.8%? (2 marks) c. Which house do you think they should buy? (1 mark)