A mortgage loan officer uses math on a continual basis during the mortgage lending process. When...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
A mortgage loan officer uses math on a continual basis during the mortgage lending process. When a prospective borrower applies for a loan, many calculations are made: debt-to-income- ratio, percentage of down payment, real estate commission, amount of prepaid interest, and amount of prepaid taxes. The loan officer also uses an amortization schedule to show buyers how the principal decreases over time. TRY IT... Two clients, Maria and Scott Hamilton, applied for a mortgage to buy their first home. Their annual income is $83,288 and they want a monthly house payment of $729. The annual property taxes on the home would be $4,201 and the annual homeowner's insurance premium would be $1,189. The couple pays $575 a month in car payments and $250 a month toward student loans. If the Hamiltons have a debt-to-income ratio that is less than 36%, they will be approved for their loan. 1. Find the monthly amounts to the nearest cent for the Hamiltons' property taxes and homeowner's insurance by dividing the annual figures by 12. Then find the sum of all the monthly payments. 2. Find the Hamiltons' monthly income by dividing their annual income by 12. 3. Calculate the debt-to-income ratio by dividing the monthly debt by the monthly income. What is the ratio? Will the Hamiltons be approved for their loan? Explain. A mortgage loan officer uses math on a continual basis during the mortgage lending process. When a prospective borrower applies for a loan, many calculations are made: debt-to-income- ratio, percentage of down payment, real estate commission, amount of prepaid interest, and amount of prepaid taxes. The loan officer also uses an amortization schedule to show buyers how the principal decreases over time. TRY IT... Two clients, Maria and Scott Hamilton, applied for a mortgage to buy their first home. Their annual income is $83,288 and they want a monthly house payment of $729. The annual property taxes on the home would be $4,201 and the annual homeowner's insurance premium would be $1,189. The couple pays $575 a month in car payments and $250 a month toward student loans. If the Hamiltons have a debt-to-income ratio that is less than 36%, they will be approved for their loan. 1. Find the monthly amounts to the nearest cent for the Hamiltons' property taxes and homeowner's insurance by dividing the annual figures by 12. Then find the sum of all the monthly payments. 2. Find the Hamiltons' monthly income by dividing their annual income by 12. 3. Calculate the debt-to-income ratio by dividing the monthly debt by the monthly income. What is the ratio? Will the Hamiltons be approved for their loan? Explain.
Expert Answer:
Answer rating: 100% (QA)
Analyzing the Hamiltons DebttoIncome Ratio for Mortgage Approval 1 Monthly ... View the full answer
Related Book For
Auditing a risk based approach to conducting a quality audit
ISBN: 978-1133939153
9th edition
Authors: Karla Johnstone, Audrey Gramling, Larry Rittenberg
Posted Date:
Students also viewed these finance questions
-
Sales Budget The beginning point for budgeting, the sales budget, is merely a summary of expected sales for the year. It is one of the simplest schedules in the master budget. Connected to it and...
-
The following additional information is available for the Dr. Ivan and Irene Incisor family from Chapters 1-5. Ivan's grandfather died and left a portfolio of municipal bonds. In 2012, they pay Ivan...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
1) The mast on the boat is held in place by the rigging, which consists of rope having a diameter of 25 mm and a total length of 50m. Assuming the rope to be cylindrical, determine the drag it exerts...
-
Evaluate the definite integrals in Problems 1-5. 1. 2. 3. 4. 5. 4x dx 8x dx Jo
-
Use the following format to classify each cost as a product cost or a selling, general, and administrative (SG&A) cost. Also indicate whether the cost would be recorded as an asset or an expense. The...
-
The following is an extract from the Sudzucker AG 2003 Annual Report: Inventories are stated at acquisition or production cost using average cost or first-in, first-out. As set out in IAS 2 the...
-
Jack asked Jill to marry him, and she has accepted under one condition: Jack must buy her a new $330,000 Rolls-Royce Phantom. Jack currently has $45,530 that he may invest. He has found a mutual fund...
-
While James Craig and his former classmate Paul Dolittle both studied accounting at school, they ended up pursuing careers in professional cake decorating. Their company, Good to Eat (GTE),...
-
During 2020, the following transactions were recorded by the Port Hudson Community Hospital, a private sector not-for-profit institution. 1. Gross charges for patient services, all charged to Patient...
-
b) Showing all supporting work, solve the equation 2x3 -5x-46x +24=0, given that x=6 is a zero.
-
The current date is 12/31/00. The Stopwhining Corporation has decided that manufacturing voting machines will become a boom business. It has access to two designs. The first involves punching holes...
-
3. [-/2 Points] DETAILS MY NOTES OSCALC1 4.7.320. ASK YOUR TEACHER PRACTICE AN Consider the construction of a pen to enclose an area. You have 200 ft of fencing to make a pen for hogs. If you have a...
-
Your close friend plans to become an investor. He is a good mathematician but lacks financial knowledge and experience. What could you advise to him (with respect to your knowledge of portfolio...
-
1)Today is April 16, 2020. You bought a futures contract on corn for December 2020 delivery. The price is $3.51 per bushel. The contract size is 5,000 bushels.You are required to establish a margin...
-
(a) Calculate the monthly car loan payments if you take out the car loan, and verify that the numbers for interest paid ($4,779.20) quoted in the article is correct (within rounding). Also show that...
-
https://libcat.uncw.edu/search~S4?/X(intelligent+lives)&searchscope=4&SORT=D&m=g&m=j&m=n&b=ev&b=wa/X(intelligent+lives)&searchscope=4&SORT=D&m=g&m=j&m=n&b=ev&b=wa&SUBKEY=(intelligent+lives)/1%2C21%2C2...
-
Cornell and Roberts are partners who agree to admit Stanley to their partnership. Cornell has a capital balance of $80,000 and Roberts has a capital balance of $120,000. Cornell and Roberts share net...
-
Why is the audit report important to the audit opinion formulation process?
-
Auditing standards require the auditor to observe the client's physical inventory. That requirement could be met by observing the client's annual physical count of inventory and, in some...
-
When testing accounts that are based on management estimates, the auditor should understand the process management uses to develop those estimates. As part of obtaining that understanding, what...
-
The standard costs for a manufacturing business are \($12\) per unit for direct materials, \($8\) per unit for direct labour, and \($5\) per unit for manufacturing overhead. The sales projection is...
-
What is Munchs expected profit for April? a. $192,500 b. $56,000 c. $66,000 d. $59,000 Munch Enterprises makes a small toy car that is voice activated. Projected sales for the next four months are...
-
Bobby Jones Inc. is planning sales of 55,000 units for the next three months. The company has a beginning inventory of 10,000 units and would like to have an ending inventory of 15,000 at the end of...
Study smarter with the SolutionInn App