Chip and Joanna Gaines are meeting with you as a loan officer, to discuss applying for a loan. They have seen a property at an open house they would like to buy but do not know if they can qualify. The Gaines have approximately $16,000 in savings. The property they are interested in purchasing is listed for $180,000.

Calculate the monthly payment on a house selling for $180,000 with a down payment of $9,000 and a first mortgage of $171,000 on a 30-year loan at five (5) percent interest. The loan will require private mortgage insurance at a rate of .75 percent of the loan amount. The annual property taxes are $3,120 per year and a hazard insurance policy will be $1,680 per year. The interest rate factor for a 30-year loan at 5 percent is $5.37 per thousand of the loan amount.

 Chip's annual income is $45,000 and Joanna has a part-time income of $18,000 per year. The Gaines have monthly debts of $390 for their car (three years left on the loan) and a $155 minimum payment on a $2,500 balance on a credit card.

 

Determine whether Chip and Joanna can qualify for this loan using standard Fannie Mae/Freddie Mac qualifying ratios of 28/36. What is your conclusion?

Provide a minimum of three solutions you suggest for the borrowers to qualify for this loan. What are your solutions?