Ask Question
4 March, 19:31

If the total debt ratio is 36%, and the allowable mortgage debt ratio is 28%, which of the following debt ratios would a loan applicant qualify for if:

a. The loan applicant's gross monthly income is $2,500, with a mortgage payment of $600

b. A car payment of $250, and minimum monthly credit card payment of $75

+5
Answers (1)
  1. 4 March, 21:46
    0
    The loan applicant would qualify for the mortgage debt ratio in option a because his mortgage debt ratio is 24% and the allowable mortgage debt ratio is 28%.

    Explanation:

    First, you have to calculate the debt ratio in each case. It is calculated by dividing the total debt by the income.

    a. Debt = $600

    Income = $2,500

    Mortgage debt ratio=600/2,500 = 0.24→24%

    b. Debt=$600+$250+$75=$925

    Income=$2,500

    Total Debt ratio=925/2,500 = 0.37→37%

    The loan applicant would qualify for the mortgage debt ratio because his mortgage debt ratio is 24% and the allowable mortgage debt ratio is 28%. The loan applicant would not qualify for the total debt ratio because his ratio is 37% and the allowable total debt ratio is 36%.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “If the total debt ratio is 36%, and the allowable mortgage debt ratio is 28%, which of the following debt ratios would a loan applicant ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers