Barb and Bob Want to Purchase a New Home but Don't

question 150

Multiple Choice

Barb and Bob want to purchase a new home but don't know how much mortgage they can qualify for.The lender requires total installment loan payments not exceed 35% of gross monthly income.Based on Barb and Bob's financial data below,what is the maximum monthly mortgage payment for which they can qualify?

• A) $1,400
• B) $1,208
• C) $1,050
• D) $ 850
• E) $ 500

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Definitions:

Consideration

In contract law, it refers to something of value exchanged between parties as the basis for a contract.

Bargained-for Exchange

Bargained-for exchange is a legal concept where parties agree to provide something of value to each other, forming the basis of a contract.

Illusory Promise

A statement that appears to be a binding commitment but allows for so much discretion that it does not legally bind the party making it.

Promisor

The party in a contract who makes a promise to perform or provide a benefit to the promisee.