Flashcards in Housing Deck (12):
What is a front-end ratio?
Mortgage payment/monthly gross income. To assess the borrower's ability to pay the mortgage. Expenditures should not exceed 25-29% of gross annual income.
Lenders use the front-end ratio in conjunction with the back-end ratio to approve mortgages.
What is a back-end ratio? And what is another name for it?
Also debt-to-income ratio. Total amount of monthly debt repayments/monthly gross income x 100. A ratio of 36% or lower is desirable. Lenders use the front-end ratio in conjunction with the back-end ratio to approve mortgages.
What is loan to value ratio?
Loan amount/value of the home. If your loan to value ratio is less than 80% you must purchase Private Mortgage Insurance.
What is earnest money?
Funds given to the seller as a deposit to hold the property until a purchase contract can be negotiated.
What does a Uniform Settlement Statement Contain?
Lists all cost associated with closing on a real estate purchase.
What is recasting?
temporary mortgage relief which involves excusing your present obligation to catch up on missed payments and instead delaying them until the end of the loan.
What is a good-faith estimate?
All of the costs associated with the loan are listed. This includes APR, fees, closing costs, etc.
Gradually paying off a mortgage loan through a series of periodic payments is?
Which ratio is a rule of thumb lenders use for determining housing affordability that compares the total expenditures for housing (PITI) with the gross income of the applicant?
Front-end-Ratio = Monthly Mortgage Payment (+PITI)/Monthly Gross Income
If a home costs $240,000 and you are putting $36,000 down, how is the loan to value ratio calculated?
Loan amount/Value of the home. $240,000-36,000/240,000 = 85%
What should homebuyers include in a contract in order to protect themselves from the possibility of being turned down for a mortgage?
A contingency clause