Question
Nicole is ready to purchase her first home. The bank has advised her that they need to work on some ratios before letting her know
Nicole is ready to purchase her first home. The bank has advised her that they need to work on some ratios before letting her know if the mortgage is approved. Calculate Nicole's Gross Debt Service (GDS) and Total Debt Service (TDS) ratio based on the information she has provided. Advise Nicole if she is within the financial institution's guidelines for obtaining a mortgage.
Annual gross salary: $85,000
Monthly student loan: $70
Estimated monthly mortgage payment: $1,650
Transportation (monthly metro pass): $51
Estimated annual property taxes: $1,500
Weekly food: $130
Estimated monthly heating: $150
Monthly home renovation loan payments: $200
Estimated annual condo fees: $500
Weekly entertainment expenses: $60
a) Calculate the GDS ratio. Is the GDS ratio within the guidelines?
b) Calculate the TDS ratio. Is the TDS ratio within the guidelines?
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