Financial Calculations

Question 1

Lenders supply qualifying ratios based on program guidelines , ex fha 31/43

Answer 1

Means house payment can be no more than 31% of gross monthly income and when included with other debts the total debt cant be of 43% of monthly income

Question 2

Housing ratios (front end)

Answer 2

Principal interest taxes and insurance and HOA dues

Question 3

Debt ratio

Answer 3

Back end - includes all installment debt, cars, student loans, revolving debt and includes housing ratio and all other debts

Question 4

Whats not included in ratios?

Answer 4

Utility bills, car insurance, gas , food

Question 5

Bob’s gross monthly income is $4000. He currently pays $1400 rent per month for a 3 bedroom house and has no other obligations except a $300 car payment. Based on this information, would Bob qualify for a $1,200 PITI FHA loan 31/43%?
a. Yes, Bob meets both ratios
b. No, Bob only meets the front ratio
c. No, Bob only meets the back ratio
d. No, Bob does not meet either ratio

Answer 5

Housing ratio(Front end) $1200/$4000=30%
Debt Ratio(Back End) $1200+$300=$1500, $1500/$4000=37.5%

Question 6

A borrower and co-borrower apply for a loan with bi-weekly income of $1,800 and annual income of $10,000 respectively. What is the maximum house payment they would qualify for assuming a qualifying housing ratio of 31%?

Answer 6

$1,800 x 26 ( pay periods)/ 12 = $3,900
$10,000 / 12 (months) = $833.33
Total Income: $4,733.33 x 31% = $1467.33 max house payment. ***

Question 7

$6,000 mo income
House payment is $1,000
Car 1 $ 500
Car 2 $400
Student Loan $90
Credit Cards $110 month
What is housing and total debt ratio?

Answer 7

Housing = (house payment(piti) / monthly income)16.7%

Total debt ratio = 35% Total Debts=$2100/Total Income $6000=35%

Question 8

What is LTV?

Answer 8

Outstanding vs what it’s worth

Question 9

What is CLTV

Answer 9

Combined loan to value - add all mortgage balances and divide into value

Question 10

What is TLTV

Answer 10

Total loan to value - comes in when borrower has a HELOC with high credit limit not being fully utilized

Question 11

Ex question:
$100,000 value of home
$60,000 1st mortgage balance
$15,000 current balance on a $40,000 HELOC
What is the LTV/CLTV/TLTV?

Answer 11

60% LTV ($60,000/$100,000)
75% CLTV $60,000 + $15,000/$100,000)
100% TLTV $60,000+$40,000/$100,000)

Question 12

How do you commute LTV?
A.) Loan amount minus the lesser value of the appraised value or mortgage value
B.) Loan amount divided the lesser value of the appraised value or mortgage value
C.) Loan amount minus the greater value of the appraisal value or mortgage value
34
D.) Loan amount divided the greater value of the appraisal value or mortgage value

Answer 12

B.