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What is the gross debt service ratio

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Reference no: EM132966227

Jasmine and their spouse are considering purchasing a larger house for their growing family. Below is a summary of their current combined income and expenses.

Combined Salary (Gross Annually) $125,000

Monthly Mortgage Payment $2,600

Master Card (minimum monthly payment) $1,500

Utilities (Monthly - Heat and Electricity) $250

Car Loan Payment (Monthly) $550

Cable TV (Monthly) $75

Cell-Phone Plan (Monthly) $150

Line of Credit (minimum monthly payment) $350

Property Tax (annual) $3,900

Problem 1: What is their Gross Debt Service (GDS) Ratio?

Option 1: 31.65%

Option 2: 32.64%

Option 3: 28.74%

Option 4: 29.67%

Option 5: 30.48%

Problem 2: Is this an acceptable GDS?

Option 1: No, it is above 32%

Option 2: Yes, it is less than 10%

Option 3: Yes, it is below 32%

Option 4: No, it is less than 10%

Option 5: It cannot be determined

Reference no: EM132966227

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