First filling the blank a) back end b) front end. second filling the blank a) annual b) monthly. Third filling the blank a) after tax b) before tax. fourth filling the blank a) back end b) front end. fifth filling the blank a) annual b) monthly.

 

Prior to making a mortgage loan, lenders will require a potential borrower to qualify and demonstrate an acceptable credit record and sufficient income to support the loan's scheduled payments. This credit evaluation relies on two basic criteria to determine maximum payment amount, and, relatedly, the maximum total loan and house amount that the borrower can afford. Generally, the guidelines specify a range for each criterion. This practice provides each lender with the flexibility to adapt its requirements to a particular loan applicant. The two borrowing criteria used by most lending institutions are as follows: The or maximum allowable housing expense, ratio, which maintains that the applicant's total expenditures for housing (as measured by a year's worth of PITI payments), cannot exceed 25%-29% of the borrower"'s annual gross, or income. The or maximum allowable monthly housing expense and long-term debt, ratio, which maintains that the total of all debt payments-including the PITI mortgage payments, auto loans, and all other debt payments-cannot exceed 33-41% of applicant's monthly gross income. Next week, your friends Paloma and Anthony want to apply to the Fourth Global Bank for a mortgage loan. They are considering the purchase of a home that is expected to cost $155,000. To prevent their possible embarrassment at the bank, and given your knowledge of personal finance, they've asked you to help answer the following questions by completing the home affordability worksheet that follows: