Kirsten Neal is interested in purchasing a new house given that mortgage rates are at a historical
Question:
(1) Monthly mortgage payments < 28% of monthly gross (before-tax) income.
(2) Total monthly installment payments (including the mortgage payments) < 37% of monthly gross (before-tax) income.
Kirsten submits the following personal financial data:
Monthly gross (before-tax) income ..... $ 4,500
Monthly installment loan obligations ..... 375
Requested mortgage ......... 150,000
Monthly mortgage payments ......... 1,100
a. Calculate the ratio for requirement 1.
b. Calculate the ratio for requirement 2.
c. Assuming that Kirsten has adequate funds for the down payment and meets other lender requirements; will Kirsten be granted the loan?
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Related Book For
Principles Of Managerial Finance
ISBN: 978-0136119463
13th Edition
Authors: Lawrence J. Gitman, Chad J. Zutter
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