Section 7: Borrower Analysis: Assets Flashcards

1
Q

Housing Ratio (Front End Ratio)

A

HR= (Monthly Housing expenses / Monthly Gross Income) / 100

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2
Q

Total Debt Income Ratio (Back end Ratio)

A

DTI=(Total Monthly Debt Obligations / Monthly Gross Income) * 100

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3
Q

Maximum Housing Payment to meet housing ratio

A

monthly gross income * lenders maximum housing ratio

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4
Q

Maximum Housing Payment to meet Total DTI Ratio

A

(Monthly gross income * Maximum Total DTI Ratio) - Other Debt

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5
Q

Gross Income 5200
600 monthly debt
Housing DTI is 28%
Total DTI is 36%
What is maximum Housing payment he can afford

A

5200 * 28% = 1456
(5200 * 36%) - 600 = 1272
Because TJ must be qualified by using both ratios and the $1272 is lessor of two, His maximum housing payment is $1272.

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6
Q

Conventional Loan Qualifying Ratio

A

Housing Ration 28%
Total Debt Ration 36%

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7
Q

Fannie Mae Conforming Loans

A

Total DTI 36-45%
Housing Ratio 28%

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8
Q

Freddie Mac Conforming Loans

A

Housing Ratio: N/A
Total Debt Ratio: upto 45%

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9
Q

FHA Loans

A

Housing Ration: 31%
Total Debt Ratio: 43%

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10
Q

VA

A

Housing Ration N/A
Total Debt Ratio: 41%

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11
Q

Loan to Value Ratio

A

Lenders use LTV to determine loanable amount

LTV = (Loan Amount / Purchase price or Appraised Value) * 100

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12
Q

The 3 Cs of Assessing the ability to Repay

A

Character - Likelihood of borrowers to replay the loan, based primarily on their credit history
Capital - Current assets, such as real estate, personal property, savings and investments
Capacity: Ability to handle the debt load, based on current income, current debts and other expense

Another C related to the property is Collateral.

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13
Q
A
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