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Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447

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BuyFindarrow_forward

Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447
Textbook Problem

Phil Armstrong earns a gross income of $5,355 per month. He has submitted an application for a fixed-rate mortgage with a monthly PITI of $1,492. Phil has other financial obligations totaling $625 per month.

a. What is his housing expense ratio?

b. What is his total obligations ratio?

c. According to the Lending Ratio Guidelines on page 468, for what type of mortgage would Phil qualify, if any?

(a)

To determine

To calculate: The housing expense ratio when the monthly gross income is $5355, monthly PITI expense is $1492 and other monthly financial obligation is $625.

Explanation

Given Information:

The monthly gross income is $5355, monthly PITI expense is $1492 and other monthly financial obligation is $625.

Formula used:

The formula for the housing expense ratio is

Housing Expense Ratio=Monthly housing expense (PITI)Monthly gross income

Calculation:

Consider the provided values,

Monthly gross income=$5355Monthly PITI expense=$1492Other monthly financial obligation

(b)

To determine

To calculate: The total obligation ratio when the monthly gross income is $5355, monthly PITI expense is $1492 and other monthly financial obligation is $625.

(c)

To determine

The type of mortgage according to the lending ratio guidelines when the monthly gross income is $5355, monthly PITI expense is $1492 and other monthly financial obligation is $625.

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