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case study 6 11 - conclusion with a mortgage loan officer...

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Mike Solomich 2/4/09 Chapter 6 Case Problem 1. What is the new monthly mortgage payment if the Stevenses could arrange a 10.5 percent, 25-year mortgage at a local financial institution? Monthly Payment $ 9.45 Per $1,000 X 96 $ 907.20 For $96,000 mortgage 2. What is the housing expense-to-income ratio for the Stevenses if they move into this new home? What will their monthly debt payment-to-income ratio be? Mortgage 907.20 Bill Income 2916.67 Annual Real Estate Taxes 308.33 Betty Income 2333.33 Hazard Insurance 41.67 Interest and Dividends 25.00 Total Expenses 1257.20 Total Monthly Income 5275.00 Expense-to-income Ratio 24% Debt Payment-to-income Ratio 17% 3. Would you recommend that the mortgage loan be approved? Discuss your
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Unformatted text preview: conclusion with a mortgage loan officer. Yes I feel that the mortgage loan be approved because the expense to income ratio is below what the recommended ratio be. Secondary market guidelines generally state that this ratio should not exceed 25-28 percent of stable monthly income. And the ratio of the debt payment-to-income ratio should generally not exceed 33-36 percent of stable monthly income. Mike Solomich 2/4/09 Chapter 11 Case Study Credit Quality Grade Excellent Good Fair Poor Income X Employment X Reserve Assets X Reputation X Collateral X Loan Purpose X Debt Ratio X Cash Flow X Summary Grade 1 4 3...
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