Chapter 14, Problem 21AT

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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

Explanation

**Given Information:**

The monthly gross income is

**Formula used:**

The formula for the housing expense ratio is

**Calculation:**

Consider the provided values,

**(b)**

To determine

**To calculate:** The total obligation ratio when the monthly gross income is

**(c)**

To determine

The type of mortgage according to the lending ratio guidelines when the monthly gross income is

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