21. Phil Armstrong earns a gross income of $5,355 per month. He has submitted an

Question

21. Phil Armstrong earns a gross income of $5,355 per month. He has submitted an application for a fixed-rate mortgage with a monthly PITI of $1,492. Phil has other financial obligations totaling $625 per month a. What is his housing expense ratio? b. What is his total obligations ratio? According to the Lending Ratio Guidelines on page 468, for what type of mortgage would Phil qualify, if any? c. 22. Magda Leon is applying for a home mortgage with a monthly PITI of $724. She currently has a gross income of $2,856 and other monthly expenses of $411. a. What is Magda's housing expense ratio? b. What is her total obligations ratio? c. According to the lending ratio guidelines, for what type of mortgage would Magda qualify if any?

Explanation / Answer

21. a. Housing Expense ratio is a ratio comparing housing expenses to pre-tax income.

Hence Housing Expense Ratio = $1492/$5,355 = 0.278618

b. Total Obligation Ratio = total obligation/ gross income = $625/$5,355 = 0.11715

c. According to Lending Ratio Guideline, Phil will qualify only for conventional type of mortgage.

22. a. Housing Expense ratio = Monthly PITI/Gross Income = $724/$2,856 = 0.2535

b. Total Obligation Ratio = obligations/gross income = $411/$2,856 = 0.143908

I have already answered four questions. for any further clarifications, do lemmie know

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