Answered

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The bank that the Payans would like to borrow from uses the back-end ratio to determine loan
qualification, approving applications if the back-end ratio is less than 36%. So, the Payans have
collected some information on what the bank will consider to
they estimate their monthly
mortgage payment will be.
calculate the ratio, including what
Income
Total monthly
Income
$10,000
Monthly Expenses
Expected mortgage $1,100
House Insurance
$150
Property taxes
$500
Car loan(s)
$1,000
Credit card debt
$400
According to the Payans' back-end ratio calculation, the bank will
lend the Payans
$250,000 to purchase the home because their back-end ratio is
36%.

Sagot :

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