To determine by how many points Julius would need to improve his credit score to afford a \[tex]$150,000 mortgage, given his annual payment limit and current credit score, we need to follow these steps:
1. Determine the maximum monthly payment Julius can afford:
Julius can pay a maximum of \$[/tex]11,500 per year. To find the maximum monthly payment, we divide the annual amount by 12:
[tex]\[
\text{Max Monthly Payment} = \frac{\$11,500}{12} = \$958.33
\][/tex]
2. Identify the FICO score range that corresponds to a monthly payment Julius can afford:
We need to see which FICO score range Julius needs to fit within to have a monthly payment that is [tex]$958.33 or less. We examine the given table:
- FICO 720-850: \$[/tex]860 (affordable within Julius' budget).
- FICO 700-719: \[tex]$872 (affordable within Julius' budget).
- FICO 675-699: \$[/tex]924 (affordable within Julius' budget).
- FICO 620-674: \[tex]$1,039 (not affordable for Julius).
- FICO 560-619: \$[/tex]1,157 (not affordable for Julius).
- FICO 500-559: \[tex]$1,238 (not affordable for Julius).
The highest monthly payment that is within Julius' limit of \$[/tex]958.33 is \[tex]$924, which falls within the FICO score range of 675-699.
3. Determine the required improvement in Julius' credit score:
Julius currently has a credit score of 463. To qualify for a monthly payment of \$[/tex]924, Julius needs to have at least a FICO score of 675.
The number of points he needs to improve his credit score is:
[tex]\[
\text{Required Improvement} = 675 - 463 = 212 \, \text{points}
\][/tex]
Therefore, Julius would need to improve his credit score by 212 points to afford a mortgage for \$150,000.
The correct answer is A. 212 points.
