A buyer qualifies for a maximum housing expense of 28% of gross monthly income. If their gross monthly income is $6,500, what is the maximum monthly housing payment?
Correct Answer
B) $1,820
Maximum housing payment = Gross monthly income × Housing ratio = $6,500 × 0.28 = $1,820.
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Related Topics & Key Terms
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Key Terms:
Related Concepts
Determining ownership days involves calculating the number of days each party (buyer and seller) owned the property during the relevant period (usually a year). This calculation is crucial for accurate proration.
The gross rent multiplier (GRM) is a quick method for estimating the value of income-producing property by multiplying the property's gross rent by a factor derived from comparable sales. GRM = Sale Price / Gross Rent.
IRV stands for Income, Rate, and Value. It represents the relationship between Net Operating Income (I), Capitalization Rate (R), and Property Value (V).
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- → A borrower takes out an interest-only loan of $180,000 at an annual interest rate of 5%. What is the interest due for the first month?
- → Annual property taxes on a home are $2,400. The property closes on June 1. Using a 360-day banker's year and assuming taxes are paid in arrears, what is the amount the seller owes the buyer as a tax proration credit?
- → A buyer purchases a home for $200,000 and makes a 15% down payment. What is the loan amount?
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- → A property sells for $220,000 and generates monthly gross rent of $1,600. What is the Gross Rent Multiplier (GRM)?
- → A property is purchased for $175,000 and appreciates at 4% per year compounded annually. What is the property's value after 2 years?
- → A property sells for $280,000. The listing broker charges a 3% commission and the buyer's broker charges 2.5%. The selling agent receives 65% of the buyer's broker commission. What does the selling agent earn?
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- → Annual property taxes are $3,600. The property closes on July 1 and taxes are paid in arrears. Using a 360-day year (30 days per month), what is the seller's proration debit (amount the seller owes the buyer at closing)?
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