Ann wants a mortgage to buy a house. Ann gives the following information to the bank:
Income: $240k/year or 20k/month
Average monthly debt: $2k
Estimated monthly Taxes + Insurance: $700
Down-payment: $50k saved
-Ann's down-payment will be $50k, she will take out a mortgage for the remainder
Ann qualifies for a 30 year FA-CPM-FRM (monthly payments & monthly compounding) with:
Annual interest rate: 4%
Income test: (28%/36%)
Collateral test: LTV ≤95%→B0 ≤19 * DP0
Closing costs + buy-down points: $5,000 + 1.75% of the balance at origination.
-Example: if Ann gets a $100k mortgage, she will pay $5k + $1.75k=$6.75k at origination.
Underwriting
based on the FE DTI what is the biggest payment Ann can make?