Problem
A. Calculate their housing debt to income (remember that all debt may not be used)
B. Calculate their total debt to income (remember that all debt may not be used)
C. Calculate the loan to value of the purchase
D. If you were the loan officer underwriting this request, what would your credit decision be? Defend your decision.
John & Julie Smith
$100,000 sales price
$88,000 loan amount
4.50% mortgage interest rate
Amortization = 30 years
Primary borrower annual salary = $51,240
Secondary borrower annual salary = $23,280
Checking acct = $4,000
Savings acct = $18,000
Real estate taxes = $2,400/year
Insurance = $972/year
2002 Honda Civic; $6,500 value, $2,798 loan balance; pmts = $146/month
2007 Nissan Maxima; $11,000 value, $6,988 loan balance; pmts = $248/month
Personal property = $4,200 value
Rent = $650/month
Credit card #1 = $1,978
Credit card #2 = $748
Credit card #3 = 1,400
Credit card pmts = 2% of balance
Student loans = $18,000
Student loan pmt = 4% of balance
Utility bill average = $275/m
Car insurance = $845 every 6 months
Child care = $800/month
Credit score = 650; average