Question

In: Finance

You are looking to purchase a $300,000 home with a 80% LTV mortgage with a term of 30-years and an interest rate of 6%.

You are looking to purchase a $300,000 home with a 80% LTV mortgage with a term of 30-years and an interest rate of 6%. Your income is $120,000 per year, the annual property taxes are $3,600, and the hazard insurance premium is $1,200 per year. The borrowers other debt service consists of a $700/month car payment and $800/month credit card minimum payment. What is the front-end DTI ratio associated with this borrower/loan?

Please input your answer as a percentage (74% would be input as 74).

Expert Solution

Step 1

Front end TDI ratio is maximum amount of monthly payment as percentage of monthly income.

Step 2

Home price=$300000

LTV = Loan to value ratio

= 80%

Home loan = 0.8 x price of home

Home loan = 300000 x 0.8=$240000

Home loan = $240000

Period = 30 years

= 30 x 12

= 360 months

Interest rate=6%

Monthly interest rate = 6/12

= 0.5%

Frond end DTI ratio = 33.38%.

Nabeel answered 1 year ago

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