Chapter 13: Application Analysis - Application Ratios
1. Briefly describe when a Mortgage Agent would be required to obtain the following documents from an applicant.
1.
A house has been appraised at a value of $550,000.
The owner requires a 1st mortgage in the amount of $255,000 and a 2nd
mortgage in the amount of $70,000.
a) What is the LTV of the 1st mortgage?
LTV = (255,000 / 550,000) x 100
LTV = 4.63636364E-1x 100
LTV = 46.36%
b) What is the total LTV of the combined 1st and 2nd mortgages?
LTV = [(255,000 + 70,000) / 550,000] x 100
LTV = (325,000 / 550,000) x 100
LTV = 5.90909091E-1 x 100
LTV = 59.09%
2.
Tedros has been approved for a mortgage in the amount of
$262,500 on a 1st mortgage. The
property he is buying is worth $350,000.
What is the LTV of this mortgage?
LTV = (262,500 / 350,000) x 100
LTV = 0.75 x 100
LTV = 75%
3.
Adela and Carlos are applying for a mortgage through you,
their local Mortgage Agent. They
have requested a mortgage in the amount of $455,000 with weekly payments for a 3
year term at 5.95% compounded semi-annually with a 25 year amortization.
They have told you that they also have a car payment of $385 per month,
annual car insurance of $2,712, a weekly loan payment of $45 and total monthly
credit card payments of $510. Their
property taxes are $2,100 per year.
Their combined income is $126,966 per year and heat on this house is $75 per
month.
a) What is their mortgage payment?
5.95 SHIFT NOM%
2 SHIFT P/YR
SHIFT EFF% 6.03850625
52 SHIFT P/YR
SHIFT NOM% 5.86651761353
455,000 +/- PV
0 FV
25 X 52 N
PMT 667.423398856
Therefore the payment is $667.43.
a)
What is their GDS?
GDS = ( PITH / INCOME) x 100
GDS = ([($667.43 x 52) + $2,100 + ($75 x 12)] / $126,966) x 100
GDS = [($34,706.36 + $2,100 + $900) / $126,966] x 100
GDS = ($37,706.36 / $126,966) x 100
GDS = 2.96979979E-1 x 100
GDS = 29.70%
b)
What is their TDS?
TDS = [(GDS + Other Debts) / INCOME] x 100
TDS = ([$37,706.36 + ($385 x 12) + ($45 x 52) + ($510 x 12)] / $126,966) x 100
TDS = [($37,706.36 + $4,620 + $2,340 + $6,120) / $126,966] x 100
TDS = ($50,786.36 / $126,966) x 100
TDS = 3.99999685E-1 x 100
TDS = 40.00%
4. Hisa and Botan are applying for a mortgage through you, their local Mortgage Agent. They have requested a mortgage in the amount of $300,000 with monthly payments for a 5 year term at 4.95% compounded semi-annually with a 25 year amortization. They have told you that they also have a car payment of $275 per month, annual car insurance of $2,000, a weekly loan payment of $95 and total monthly credit card payments of $300. Their property taxes are $2,100 per year. Their combined income is $95,000 per year and heat on this house is $75 per month.
a) What is their mortgage payment?
4.95 SHIFT NOM%
2 SHIFT P/YR
SHIFT EFF% 5.01125625
12 SHIFT P/YR
SHIFT NOM% 4.89971192521
300,000 +/- PV
0 FV
25 X 12 N
PMT 1,736.28573872
Therefore the payment is $1,736.29
b) What is their GDS?
GDS = (PITH / INCOME) x 100
GDS = ([($1,736.29 x 12) + $2,100 + ($75 x 12)] / $95,000) x 100
GDS = [($20,835.48 + $2,100 + $900) / $95,000] x 100
GDS = ($23,835.48 / $95,000) x 100
GDS = 2.50899789E-1 x 100
GDS = 25.09%
c) What is their TDS?
TDS = (GDS + Other Debts) / INCOME x 100
TDS = ([($23,835.48) + ($275 x 12) + ($95 x 52) + ($300 x 12)] / $95,000) x 100
TDS = [($23,835.48 + $3,300 + $4,940 + $3,600) / $95,000] x 100
TDS = ($35,675.48 / $95,000) x 100
TDS = 3.75531368E-1 x 100
TDS = 37.55%
5.
Joe and Mary are applying for a mortgage through you, their
local Mortgage Broker. They have
requested a mortgage in the amount of $640,000 with bi-weekly payments for a 5
year term at 3.75% compounded semi-annually with a 25 year amortization.
They have told you that they also have a car payment of $405 per month,
annual car insurance of $3,000, a weekly loan payment of $55 and total monthly
credit card payments of $400. Their
property taxes are $2,100 per year.
Their combined income is $145,000 per year and heat on this house is $75 per
month.
a) What is their mortgage payment?
3.75 SHIFT NOM%
2 SHIFT P/YR
SHIFT EFF% 3.78515625
26 SHIFT P/YR
SHIFT NOM% 3.71793285711
640,000 +/- PV
0 FV
25 X 26 N
PMT 1,512.7495715
Therefore the payment is $1,512.75
b) What is their GDS?
GDS = (PITH / INCOME) x 100
GDS = ([($1,512.75 x 26) + $2,100 + ($75 x 12) / $145,000) x 100
GDS = [($39,331.50 + $2,100 + $900) / $145,000] x 100
GDS = ($42,331.50 / $145,000) x 100
GDS = 0.29194137931 x 100
GDS = 29.19%
c) What is their TDS?
TDS = [GDS + Other Debts) / INCOME] x 100
TDS = ([$42,331.50 + ($405 x 12) + ($55 x 52) + ($400 x12)] / $145,000) x 100
TDS = [($42,331.50 + $4,860 + $2,860 + $4,800) / $145,000] x 100
TDS = ($54,851.50 / $145,000) x 100
TDS = 3.78286207E-1 x 100
TDS = 37.83%
6.
Lin and Shen have been approved for a mortgage through you,
their local Mortgage Broker in the amount of $200,000 with monthly payments for
a 1 year term at 8.25% compounded semi-annually with a 25 year amortization.
They have told you that they also have a car payment of $405 per month, a
Line of Credit payment of $180 per month and total monthly credit card payments
of $400. Their property taxes are
$2,100 per year. Their combined
income is $75,000 per year and heat on this house is $75 per month.
a) What is their mortgage payment?
8.25 SHIFT NOM%
2 SHIFT P/YR
SHIFT EFF% 8.42015625
12 SHIFT P/YR
SHIFT NOM% 8.1116763434
200,000 +/- PV
0 FV
25 X 12 N
PMT 1,558.45756673
Therefore the payment is $1,558.46
b) What is their GDS?
GDS = (PITH / INCOME) x 100
GDS = ([($1,558.46 x 12) + $2,100 + ($75 x 12) / $75,000) x 100
GDS = [($18,701.52 + $2,100 + $900) / $75,000] x 100
GDS = ($21,701.52 / $75,000) x 100
GDS = 0.2893536 x 100
GDS = 28.94%
c) What is their TDS?
TDS = [GDS + Other Debts) / INCOME] x 100
TDS = ([$21,701.52 + ($405 x 12) + ($180 x 12) + ($400 x12)] / $75,000) x 100
TDS = [($21,701.52 + $4,860 + $2,160 + $4,800) / $75,000] x 100
TDS = ($33,521.52 / $75,000) x 100
TDS = 0.4469536 x 100
TDS = 44.70%
7.
Dalila has been approved for a $30,000 2nd mortgage with
monthly payments, a 1 year term, 10 year amortization at 12.5% compounded
semi-annually. She has a first
mortgage with an outstanding balance of $220,000 (down from $230,000 when she
first took out the mortgage) with bi-weekly payments of $700.
The second mortgage is going to consolidate her credit cards for which
she currently pays $390 per month.
She has a car lease of $360 per month, annual car insurance payments of $2,300
and monthly home insurance premiums of $150.
Her property taxes are $3,500 per year and it costs $75 per month to heat
her home, which has been appraised at $350,000.
Dalila earns $78,000 per year as a manager.
a)
What is the LTV of the 1st mortgage?
LTV = ($220,000 / $350,000) x 100
LTV = 6.28571429E-1 x 100
LTV = 62.86%
b)
What is the LTV of the 2nd mortgage?
LTV = ($30,000 / $350,000) x 100
LTV = 8.57142857E-2 x 100
LTV = 8.57%
c)
What is the total LTV of the 2nd mortgage?
LTV = [($220,000 + $30,000) / $350,000] x 100
LTV = ($250,000 / $350,000) x 100
LTV = 7.14285714E-1 x 100
LTV = 71.43%
d)
What is her mortgage payment for the 2nd mortgage?
12.5 SHIFT NOM%
2 SHIFT P/YR
SHIFT EFF% 12.890625
12 SHIFT P/YR
SHIFT NOM% 12.1863869431
30,000 +/- PV
0 FV
10 X 12 N
PMT 433.651451991
Therefore the payment is $433.66
e)
What is her GDS?
GDS = (PITH / INCOME) x 100
GDS = ([($433.66 x 12) + ($700 x 26) + $3,500 + ($75 x 12) / $78,000) x 100
GDS = [($5,203.92 + $18,200 + $3,500 + $900) / $78,000] x 100
GDS = ($27,803.92 / $78,000) x 100
GDS = 3.56460513E-1 x 100
GDS = 35.65%
f)
What is her TDS?
TDS = [GDS + Other Debts) / INCOME] x 100
TDS = ([$27,803.92 + ($360 x 12)] / $78,000) x 100
TDS = [($27,803.92 + $4,320) / $78,000] x 100
TDS = ($32,123.92 / $78,000) x 100
TDS = 4.11845128E-1 x 100
TDS = 41.18%
8. Your clients, Aarav and Anika have applied for a mortgage with you.
They are buying a high-rise condo and need a mortgage in
the amount of $320,000.
You’ve suggested that they take a mortgage with monthly
payments for a 5 year term at 3.35% compounded semi-annually with a 20 year
amortization.
They have told you that they also have a car payment of $310 per
month, annual car insurance of $2,000, a weekly loan payment of $80 and total
monthly credit card payments of $275.
The property taxes are $2,100 per year while the condo
maintenance fees are $418 per month.
Their combined income is $117,000 per year and heat,
which is not included in the maintenance fee, is estimated at $100 per month.
a) What is their mortgage payment?
3.35 SHIFT NOM%
2 SHIFT P/YR
SHIFT EFF% 3.37805625
12 SHIFT P/YR
SHIFT NOM% 3.326856310594
320,000 +/- PV
0 FV
20 X 12 N
PMT $1,827.526803443
Therefore the payment is $1,827.53 (mortgage
payments are always rounded UP to the next highest cent)
b) What is their GDS?
GDS = (PITH / INCOME) x 100
GDS = ([($1,827.53 x 12) + $2,100 + ($100 x 12) +
(418 x .50 x 12) / $117,000) x 100
GDS = [($21,930.36 + $2,100 + $1,200 + $2,508.00) /
$117,000] x 100
GDS = ($27,738.36 / $117,000) x 100
GDS = 0.237080000 x 100
GDS = 23.71%
c) What is their TDS?
TDS = [GDS + Other Debts) / INCOME] x 100
TDS = ([$27,738.36 + ($310 x 12) + ($80 x 52) +
($275 x12)] / $117,000) x 100
TDS = [($27,738.36 + $3,720 + $4,160 + $3,300) /
$117,000] x 100
TDS = ($38,918.36 / $117,000) x 100
TDS = 0.332635555556
TDS = 33.26%
