When completing the URLA Form 1003, borrowers must disclose their monthly housing expense. This information is primarily used to calculate which ratio?
Correct Answer
C) Housing expense ratio
The housing expense ratio (also called the front-end ratio) compares the borrower's total monthly housing payment to their gross monthly income. This is a key qualifying ratio used in mortgage underwriting, typically requiring the ratio to be 28% or less for conventional loans.
Why This Is the Correct Answer
The housing expense ratio (also called the front-end ratio) compares the borrower's total monthly housing payment to their gross monthly income. This is a key qualifying ratio used in mortgage underwriting, typically requiring the ratio to be 28% or less for conventional loans.
More Mortgage Knowledge Questions
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A borrower asks about the difference between discount points and origination fees. What is the most accurate explanation?
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