An Ohio borrower has a monthly PITI payment of $1,800, which includes principal ($350), interest ($750), property taxes ($400), and homeowner's insurance ($300). The borrower's gross monthly income is $6,000. What is the borrower's housing expense ratio (front-end ratio)?
Correct Answer
C) 30.0%
Housing expense ratio = Total PITI ÷ Gross Monthly Income = $1,800 ÷ $6,000 = 0.30 = 30.0%.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An adjustable-rate mortgage (ARM) has an interest rate that changes periodically based on market conditions, typically after an initial fixed-rate period. The rate adjustment is tied to a financial index plus a margin.
Closing costs are the fees and expenses paid by the buyer and seller at the closing of a real estate transaction, beyond the purchase price. They typically range from 2-5% of the purchase price.
A conventional loan is a mortgage that is not insured or guaranteed by a government agency such as the FHA, VA, or USDA. It is originated and funded by private lenders and may be conforming or non-conforming.
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An Ohio property has an annual property tax of $7,200 paid in arrears. The closing date is October 1. Using a 360-day year (30 days per month), what is the seller's property tax proration credit to the buyer?
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