Do you consider such guidelines too restrictive

Reference no: EM132036222

Question: PITI is typically quoted on a monthly basis and compared to a borrower's monthly gross income by means of computing the individual's front-end and back-end ratios, which are used to approve mortgage loans. Generally, mortgage lenders prefer PITI to be equal to, or less than 28%, of a borrower's gross monthly income. Example: If the lender requires a debt-to-income ratio of 28/36, then to qualify a borrower for a mortgage, the lender would go through the following process to determine what expense levels they would accept: Using Yearly Figures: Gross Income of $45,000 $45,000 x .28 = $12,600 allowed for housing expenses, which would include the principal payment, interest, taxes and insurance. $45,000 x .36 = $16,200 allowed for housing expense plus recurring debt. The recurring debt would be such things as student loan payments, revolving credit payments, and car payments. Using Monthly Figures: Gross Income of $3,750 ($45,000/12) $3,750 x .28 = $1,050 allowed for housing expense (PITI) $3,750 x .36 = $1,350 allowed for housing expense (PITI) plus recurring debt. Do you consider such guidelines too restrictive for an individual to be able to qualify for a mortgage? Explain fully your rationale for your stated position. (You may want to calculate your overall "PTIT" percentages.)

Reference no: EM132036222

Questions Cloud

What is the effective annual rate : You plan to apply for a loan from Bank of America. The nominal annual interest rate for this loan is 18.94 percent, compounded daily (with a 365-day year).

How long do you have to pay before the account is overdue : You place an order for 1,800 units of Good X at a unit price of $55. The supplier offers terms of 1/10, net 45. How long do you have to pay before the account

How large of a sales increase can the company achieve : Pierce Furnishings generated $2 million in sales during 2014, and its year-end total assets were $1.5 million. Also, at year-end 2014, current liabilities.

What is the total amount paid by the corporation : A U.S. corporation has purchased currency call options to hedge a 70,000 pound payable. The premium is $.02 and the exercise price of the option is $.50.

Do you consider such guidelines too restrictive : PITI is typically quoted on a monthly basis and compared to a borrower's monthly gross income by means of computing the individual's front-end.

What is your arbitrage profit in dollars : What is your arbitrage profit in dollars? At what implied cross-rate between CHF and CAD there will be no arbitrage opportunity?

What is mill harm principle : What is Mill's harm principle? and why does he think it will solve the problem of tyrannical majority rule? (creating a society that will respect the individual

Calculate the economic rate of return : Now compute the steady-state book rate of return (ROI) for a mature company producing polyzone.

Formation of social contract and commonwealth : According to Hobbes, how does the formation of the social contract and the commonwealth resolve the misery of living in the state of nature?

User Account

All Pages