Question 2

Harvey and Esmeralda's combined gross income is $75,000, and their monthly consumer debt is $558. They wish to purchase a new home valued at $185,000 but need to know if they qualify for a mortgage of $145,000 amortized over 20 years. The mortgage interest rate on a 5-year mortgage term is 5.75%. Property taxes are $1,800/year and the heating cost for the home is $1,200/year. What is their monthly mortgage payment?

Select one:

a. None of the above

b. $1,012.43

c. $942.60

d. $1,018.02

e. $924.60

Question 3

Referring to question 2, what is Harvey and Esmeralda's total debt service ratio (TDSR)?

Select one:

a. 0.3232

b. .2222

c. 0.2020

d. 0.2913

e. 0.3361

Question 4

Penny and Ernest want to purchase a new home for $150,000. Their combined income is $58,000, and they will make a down payment of $48,000. Taxes on the house are $1,800 per year and the heating cost is $1,300 annually. The house includes condo fees of $500. The couples other debt payments are $623 per month for their car loan and their student loan. In order to keep payments low, the mortgage will be amortized over 25 years. The interest rate on a 5-year mortgage term is 6%. What is their monthly mortgage payment?

Select one:

a. $715.68

b. $652.60

c. $716.58

d. $726.58

e. $725.85

Question 5

Referring to question 4, what is Penny and Ernest's gross debt service ratio (GDSR)?

Select one:

a. 19.83%

b. 31.39%

c. 18.50%

d. 10.42%

e. 24.02%

Question 6

Referring to question 4, assume Penny and Ernest lose this deal and want to know the maximum amount of money they can borrow. If the bank's maximum TDSR is 40%, what is the largest payment they can handle? Hint:determine the maximum monthly mortgage payment using the TDSR formula and the information provided in question 4.

Select one:

a. $1,860.66

b. $552.00

c. $1,680.66

d. $1,068.66

e. $802.00

Question 7

Referring to questions 4 and 6, what would be the amount of the mortgage if they decide to make the maximum mortgage payment?

Select one:

a. $167,028.59

b. $176,028.59

c. $86,276.07

d. $325,280.59

e. $125,350.37

Question 8

Ervin and Freda are looking for a home; their combined incomes total $77,000. The couple were able to negotiate a rate of 5.25% for a 5-year fixed term on a 25-year amortization. The taxes are estimated at $1,800, and heating costs are $1,200; their personal debt consumption is $725 per month. The bank's guideline is 40% for the TDSR and 32% for the GDSR. Using the TDSR guideline, determine the maximum mortgage they qualify for.

Select one:

a. $154,685.19

b. None of the above

c. $254,658.19

d. $254,723.19

e. $267,094.91

Question 9

Martina and Anton are attempting to qualify for a mortgage with total mortgage financing (mortgage payment + property taxes) of $1486, heating costs of $68 and a car loan payment of $346. What minimum gross monthly income will they need to have in order to qualify if the maximum debt service ratios allowed by the bank are a GDSR of 32% and a TDSR of 40%?

Select one:

a. $4953.00

b. $4750.00

c. $5937.50

d. $6333.33

Question 10

The total household income available is $4,963. Monthly mortgage payments are $1,189. In addition, there are condo fees of $125, property taxes of $150/month, heating costs of $56/month, and a car lease payment of $241/month. What is the GDSR?

Select one:

a. 30.6%

b. 29.4%

c. 34.2%

d. 33.0%