To determine how many points Ellsworth needs to improve his credit score and what his new monthly payment would be for a [tex]$150,000 mortgage, we can follow these steps:
1. Determine the maximum monthly payment Ellsworth can afford:
- Ellsworth can afford to pay $[/tex]14,000 per year.
- To find the maximum monthly payment, we divide the yearly amount by 12:
[tex]\[
\text{Maximum Monthly Payment} = \frac{14,000}{12} = 1166.67
\][/tex]
2. Identify the current credit score and its corresponding monthly payment:
- Ellsworth's current credit score is 498.
- From the table, the monthly payment for a credit score in the 500-559 range is [tex]$1238.
3. Find the monthly payment within Ellsworth's affordable range:
- We review the table to find the highest credit score range where the monthly payment is less than or equal to $[/tex]1166.67.
- The monthly payments in the table are as follows:
- [tex]$860 for a score of 720-850
- $[/tex]872 for a score of 700-719
- [tex]$924 for a score of 675-699
- $[/tex]1039 for a score of 620-674
- [tex]$1157 for a score of 560-619
- $[/tex]1238 for a score of 500-559
- The highest credit score range with a monthly payment less than or equal to [tex]$1166.67 is the 720-850 range, with a payment of $[/tex]860.
4. Determine the required credit score improvement:
- To qualify for the [tex]$860 monthly payment, Ellsworth needs a score in the 720-850 range.
- The minimum score in this range is 720.
- Therefore, the number of points Ellsworth needs to improve his credit score is:
\[
\text{Points Needed} = 720 - 498 = 222
\]
In conclusion:
- Ellsworth needs to improve his credit score by 222 points.
- His new monthly payment would be $[/tex]860, which is within his affordable range of a maximum monthly payment of $1166.67.
