Answer: the required realized income before each month for your parents to afford the mortgage payment would be approximately $261,940.70.
Explanation:
To determine the required realized income before each month for your parents, we need to calculate the remaining mortgage amount after the down payment and the interest rate. The remaining mortgage amount is the purchase price minus the down payment.
Purchase price of the house: $187,500
Down payment (20%): 0.2 * $187,500 = $37,500
Remaining mortgage amount: $187,500 - $37,500 = $150,000
Now, we can use the remaining mortgage amount, the monthly payment, and the interest rate to calculate the required realized income.
Interest rate: 4.65% (expressed as a decimal: 0.0465)
Monthly payment: $1,575
To find the required realized income, we can use the formula for the monthly payment of a mortgage:
Monthly Payment = (Loan Amount * Interest Rate) / (1 - (1 + Interest Rate)^(-Number of Payments))
In this case, we need to solve the formula for the Loan Amount, which represents the required realized income.
Loan Amount = (Monthly Payment * (1 - (1 + Interest Rate)^(-Number of Payments))) / Interest Rate
Number of Payments per year: 12 (assuming monthly payments)
Number of Payments = Number of Years * Number of Payments per year
Assuming a 30-year mortgage:
Number of Years = 30
Number of Payments = 30 * 12 = 360
Now, let's substitute the values into the formula:
Loan Amount = ($1,575 * (1 - (1 + 0.0465)^(-360))) / 0.0465
Loan Amount ≈ $261,940.70