Question

The Delos' adjusted gross income is $198,000 per year. The Delos' monthly

housing expenses come out to $1,967.41. Their car payment is $299, their
student loan payments combined are $550, and their credit card bill is
$1,250. Calculate their back-end ratio and determine whether the bank
will approve them for the mortgage.

25%, Yes
25%, No
24%, No
24%, Yes

Answer 1

Option “A". 25% , Yes” is correct answer.

Explanation:

`Ratio=\frac{\text{Total monthly credit obligation}}{\text{gross monthly income}}`

Total monthly credit obligation =
`1,967.41+299+550+1,250=\$4,066.41`

Monthly income=(round off)

Back end ratio is less 36% hence bank will approve them for the mortgage.