Suppose an individual has $45,000 in annual income and considering a home that they intend to finance with a $150,000 mortgage at 4% APR 30-year fixed rate loan, the real estate taxes and insurance are $2,000 per year, auto payments are $350/month, and student loans payments are $400/month.
(1) Calculate the two qualification ratios.
(2) Would this individual qualify for this loan using a standard 28/36 ratio criteria?
Show all work for credit.
Answer:
Front end
PMT $716.12
Insurance and Taxes $166.67
PITI $882.79
FE=PITI/Gross income = (Principle + Interest + Taxes + Insurance) / Gross Mo inc
Ratio 1 24%
Ratio 2 44%
You might also like to view...
Can a country have a trade deficit forever?
What will be an ideal response?
A die is rolled. If it lands 1 or 2, the person receives $90. If it 3 or 4, the person receives $30.00. If it lands 5 or 6, the person receives $60. If the person is willing to pay $60 to take this gamble, they must be
a. risk-averse. b. risk-neutral. c. risk-preferring. d. either risk-neutral or risk-preferring (not risk-averse).
When a polluter has to bear the full social cost of their actions, they will
A. will always decide to reduce the amount of pollution by reducing the quantity they produce. B. weigh the costs and benefits of each potential action and might decide to not stop polluting by paying a fine. C. go out of business since pollution abatement is expensive. D. increase the price of the product and the quantity produced to pay for the additional costs.
The government imposes a luxury tax on automobiles that cost more than $40,000. As a result, fewer individuals purchase cars that cost more than $40,000. This is an example of
A. tax shifting. B. tax evasion. C. tax equity. D. tax incidence.