Using the information provided below and the Conforming Loan Qualification form (refer to page 313 in your book or refer to template provided), determine if these borrowers (Mr. Jones and Mrs. Jones) would qualify for the loan that they are applying for. Assume ALL costs under Housing Costs are required costs and are considered part of the Mortgage payment and thus include these in the front-end and back-end ratio calculations,

Ratios:

Front-end HUD ceiling 31%

Back-end HUD ceiling 43%

Please explain your conclusions in 3-4 paragraphs. Be sure to explain your thought process, observations, conclusions and recommendations. No more than 4 paragraphs. Be sure to number your paragraphs, write using well written sentences, and ensure your spelling is correct. You may submit in Excel and/or Word.

Mr. Jones and Mrs. Jones Case Study Facts:

Applying for: $80,000 loan, @ 6%, 30 yrs, $479.64 per month

Income: Borrower: $1,500/mo, FIT - $184, State - $45, SS Tax - $107

Co-Borrower $1,600/mo, FIT - $196, State - $48, SS Tax - $114

Housing Costs: Monthly Payments

Property Tax: $100

Insurance: $ 50

Utilities: $160

Mortgage Insurance: $ 20

Maintenance: $ 45

Homeowners Assessment: $ 30

Fixed Obligations: Monthly Payments

Health Insurance: $ 45

Child Care: $ 95

GMAC: (owes $3,230) $170

Mastercard: (owes $620) $ 45

Citibank Visa: (owes $510) $ 35

Conforming Loan

Qualification Worksheet

Loan Amount $80,000 Rate 6% Term 30yrs P & I _________

Borrower Co-Borrower Total

Gross Monthly Income (GMI) $1,500/mo. $1,600/mo. $3,100

Housing Costs - Monthly

P & I ____________________

Property Taxes $ 100

Hazard Insurance $ 50

Homeowners Assoc Dues $ 30

Other (PMI) ____________________

Total Housing Cost ____________________

Ratio (Divided by GMI) ____________________ Maximum of 28%

Total Debt Ratio

Total Housing Costs

Installment Obligations ____________________

Revolving Accounts ____________________

Child Care/Support $ 95

Other Recurring Charges ____________________

Total Monthly Debt ____________________

Ratio (Divided by GMI) ____________________ Maximum of 36%