The most Mariah can afford to pay per year in mortgage payments is [tex]$\$ 12,500$[/tex], and her credit score is currently 531. According to the following table for a [tex]$\[tex]$ 150,000$[/tex][/tex] mortgage, by how many points would she need to improve her credit score in order to take a mortgage for [tex]$\$ 150,000[tex]$[/tex]?

\begin{tabular}{|l|l|l|}
\hline
\begin{tabular}{l}
FICO \\
Score
\end{tabular} & \begin{tabular}{l}
Interest \\
Rate
\end{tabular} & \begin{tabular}{l}
Monthly \\
Payment
\end{tabular} \\
\hline
$[/tex]720-850[tex]$ & $[/tex]5.59 \%[tex]$ & $[/tex]\[tex]$ 860$[/tex] \\
\hline
[tex]$700-719$[/tex] & [tex]$5.71 \%$[/tex] & [tex]$\$[/tex] 872[tex]$ \\
\hline
$[/tex]675-699[tex]$ & $[/tex]8.25 \%[tex]$ & $[/tex]\[tex]$ 824$[/tex] \\
\hline
[tex]$620-674$[/tex] & [tex]$7.40 \%$[/tex] & [tex]$\$[/tex] 1,038[tex]$ \\
\hline
$[/tex]560-619[tex]$ & $[/tex]8.53 \%[tex]$ & $[/tex]\[tex]$ 1,157$[/tex] \\
\hline
[tex]$500-559$[/tex] & [tex]$9.29 \%$[/tex] & [tex]$\$[/tex] 1,238$ \\
\hline
\end{tabular}

A. 144 points
B. 29 points
C. 169 points
D. 89 points



Answer :

Let's break down the problem step-by-step to understand how many points Mariah needs to improve her credit score to afford a mortgage for [tex]$150,000 given her annual payment budget of $[/tex]12,500.

1. Calculate Monthly Payment Budget:
- Mariah can afford to pay [tex]$12,500 per year. - Monthly payment budget: \[ \frac{12,500}{12} \approx 1041.67 \] 2. Analyze Current Credit Score: - Mariah's current credit score is 531. - According to the table, a score of 531 falls in the $[/tex]500-559[tex]$ range, with a monthly payment of $[/tex]1,238.

3. Compare Current Monthly Payment with Budget:
- The monthly payment of [tex]$1,238 exceeds her budget of $[/tex]1,041.67.

4. Determine Required Credit Score Improvement:
- We need to determine the credit score range where the monthly payment is within her budget.
- Looking at the table, the [tex]$560-619$[/tex] range has a monthly payment of [tex]$1,157, which is still above her budget. - Next, we look at the $[/tex]620-674[tex]$ range, where the monthly payment is $[/tex]1,038, which is within her budget ([tex]$1,038 < $[/tex]1,041.67).

5. Calculate Points Needed to Reach Affordable Score Range:
- To move from her current score (531) to the next acceptable range ($620-674), she needs to reach at least a score of 620.
- Therefore,
[tex]\[ 620 - 531 = 89 \][/tex]

Hence, Mariah needs to improve her credit score by 89 points.

So, the answer is:
D. 89 points