Chapter 13 Key Terms & Definitions

Question 1

Gross debt service ratio (GDS)

Answer 1

A debt service ratio that measures the amount of shelter (housing) payments in comparison to the amount of gross income, expressed as a percentage. The formula is (PITH [Principal + Interest + Taxes + Heating] + 1/2 of condo maintenance fee [when applicable]) / Gross Income

Question 2

Industry standard

Answer 2

An amount that the mortgage industry will typically use in a calculation or a practice

Question 3

Loan to Value (LTV)

Answer 3

The amount of a loan to the value of the property expressed as a percentage. Loan to Value (%) = Loan / Property Value

Question 4

Percentage

Answer 4

A fraction or ratio with 100 understood as the denominator; for example .98 equals a percentage of 98

Question 5

Property value

Answer 5

The value, in dollars, of a property, usually determined by independent verification such as an appraisal

Question 6

Total debt service ratio (TDS)

Answer 6

A debt service ratio that measures the amount of shelter payments (PITH and condo maintenance fees, where applicable) and other debt payments in comparison to the amount of gross income, expressed as a percentage. The formula is (PITH [Principal + Interest + Taxes + Heating] + other debts + 1/2 condo maintenance fee [where applicable]) / Gross Income.