Number of open accounts, total credit limit, types of credit (e.g., credit cards, installment loans), length of credit history (e.g., when opened, latest activity), total amount of debt outstanding, number of late payments in the past 30-60-90 days, presence of adverse public records (e.g., liens, judgments, bankruptcies), number of recent credit inquiries, re-establishment of positive credit history after past payment problems. Students also viewedRationale: Total debt-to-income ratio: 36% The maximum monthly mortgage payment Mary can qualify for is $807. Remember, when both ratios are used, Mary must qualify under both ratios, so the lower figure is the most she can afford. The $807 number represents the maximum payment for principal, interest, taxes, and insurance (PITI) plus any other housing obligations, such as Homeowner's Association dues. Rationale: REMEMBER: 28% (housing expense ratio) - 36% (debt-to-income ratio) 1. Lisa's monthly income = $18 hourly wage x 40 hours/week x 52 weeks = $37,440 annual income; $37,440 annual income ÷ 12 months = $3,120 Dave's monthly income = $625 weekly income x 52 weeks = $32,500 annual income; $32,500 annual income ÷ 12 months = $2,708.33 Total
stable monthly income = $3,120 + $2,708.33 = $5,828.33 2. Maximum debt-to-income allowed = $5,828.33 x 0.36 = $2,098.20 3. Yes. Although Lisa and Dave have only been at their jobs a short time, Lisa had special training in the Air Force and Dave is a vocational nurse, which also implies special training. 1. $700 weekly income x 52 weeks = $36,400 annual income 2. $878 mortgage payment + $212 auto payment = $1,090 total debt service 3. Yes, Mr. Able will have a few problems closing this transaction. The equity in his home ($14,000) plus money in the bank ($3,600) equals only $17,600, but his down payment plus estimated closing costs = $18,400. He needs to show two additional months of cash reserves. His housing expense ratio of 29% exceeds guidelines. 4. Yes, Mr. Able's VOD is a problem because his current balance of $3,600 is significantly higher than his average balance of $1,000. He will need to have a good explanation of where the funds came from so the lender knows that he did not borrow the down payment. a. different levels of risk, depending on the type of fund; riskier than money market funds, but less risky than stock funds; 1. Compare quotes online |