Math Review

Question 1

A $150,000 loan on a $200,000 purchase requiring a price adjustment of .75 points for LTV and 1.5 points for property type would require how much cash to cover the discounts?

Answer 1

1.5% plus .75% equals 2.25% times $150K equals $3,375

Question 2

A borrower has a price of $421,000, debt ratio of 25/32 and good credit. She has $45,000 for a down payment. Is this a conforming loan?

Answer 2

Yes, $421K minus $45K equals $376K

under the$417K loan limit in most places

Question 3

Sales price of $150,000. Down payment $15,000. Interest rate is 8.5%. Three points. What is the cost of points?

Answer 3

$4,050. $150K minus $15K equals $135K times .03

Question 4

Sales price of $90,000. Down payment $10,000. Three points. What is the cost of points?

Answer 4

$80K times .03 equals $2,400

Question 5

Sales price $120,000. Closing costs 4% of price. Seller will pay 50% of closing costs. How much cash to close at an LTV of 85%?

Answer 5

15% down payment of $120K or

$18K plus 2% closing equals $20,400

Question 6

Income is $250 gross per week. What is the qualifying monthly income?

Answer 6

$250 times 52 weeks divided by 12 months equals $1,083

Question 7

Gross income is $3,000 per month. Highest housing payment for a conventional mortgage including taxes and insurance?

Answer 7

28% times $3,000 equals $840

Question 8

Income is $3,000 per month. Monthly debt of $450 (car, credit card, etc.). What is the maximum monthly payment using 36% for a conventional loan?

Answer 8

$3,000 times 36% equals $1,080 minus $450 equals $630

Question 9

Sales price is $100,000. Down payment $10,000. Two discount points. Cost of points?

Answer 9

$90K times .02 equals $1,800

Question 10

Debt ratio of 45%. Income is $65,000 per year. Monthly consumer debt of $490. Escrow requirement $360 per month. What is the maximum interest and principal payment?

Answer 10

$65K divided by 12 equals $5,416 per month
times 45% ratio equals $2,437
minus $850 debt equals $1,587

Question 11

Tax-free income is adjusted at 125%. What income amount would be added if the tax-free income was $80,000?

Answer 11

$20K

Question 12

Base rate of 6.5%, 1.5 points for property type and a .75% adjustment to the rate. Actual interest rate?

Answer 12

7.25%. Points are not added to rate

Question 13

Sales price is $275,000. Earnest money $2,000. Closing costs $3,750. 75% loan. Seller will pay $2,000 of closing costs. How much money needed to close?

Answer 13

Down payment equals $275K times 25% equals $68,750
plus $3,750 minus $2K earnest
minus $2K seller equals $68,500

Question 14

Bi-weekly pay of $2,200. The monthly pay equals _____.

Answer 14

$2,200 times 26 divided by 12 equals $4,766.66

Question 15

Applicant works 50 hours a week on a job of one year. Pay is $16 per hour plus time and a half for overtime. Monthly qualifying income is $2,773.33. Why?

Answer 15

Overtime must be a pattern for 2 years

Question 16

Loan amount is $575,000 at 8.625%. Interest only monthly payment equals _____.

Answer 16

$575K times .08625 divided by 12 equals $4,132.81

Question 17

Appraisal is $250,000. Sales price is $235,000. Loan amount is $200,000. LTV is _____.

Answer 17

$200K divided by $235K (lower of appraisal or sales price) equals 85%

Question 18

Income is $8,200 (husband and wife). Consumer debt is $495. 401K loan payments of $475 for eight more months. Ratio of 28/36. What is the maximum monthly house payment?

Answer 18

Housing ratio equals $8,200 times 28% equals $2,296
Debt ratio equals $8,200 times 36% equals $2952 minus $495 equals $2,457
Do not use 401K loan payments because there is less than 10 payments remaining.
Lower of ratios is $2,296 so that is the maximum

Question 19

Sales price is $180,000. Appraisal is $175,000. What is the maximum 80% conventional loan?

Answer 19

$140K - 80% times lower of sales price or appraisal

Question 20

Appraisal is $191,000. First of $55,000. Qualifies for a 85% CLTV (Combined Loan to Value). What is the maximum second?

Answer 20

$191K times 85% equals $162,350 minus $55K equals $107,350

Question 21

The offer is $105,000. Appraisal is $112,000. How much is the down payment on an FHA loan?

Answer 21

105K times 3.5% (lower of sales price or appraisal) equals $3,675

Question 22

The loan amount is $50,000. Interest paid yearly is $5,500. What is the interest rate?

Answer 22

$5,500 divided by $50K equals 11%

Question 23

Sales price is $227,000. Closing costs are $5,200. Loan amount is $175,000. Seller will pay $1,000 of closing costs. What is the acquisition cost?

Answer 23

$227K plus $5,200 minus $1,000 equals $231,200

Question 24

Debt ratio is 28/36. Consumer debt is $635 per month. Annual income is $39,000. What is the maximum payment?

Answer 24

$39K divided by 12 equals $3,250 monthly income
times 28% equals $910 housing payment.
$3,250 monthly income times 36% equals $1,170
minus $635 equals $535 the maximum payment allowed.

Question 25

FHA loans: Weekly income of $800. Monthly consumer debt of $645. What is the maximum monthly payment?

Answer 25

Monthly income: $41,600 divided by 12 equals $3,466.67
Housing Ratio: $3,466.67 times 31% equals $1,075
Debt Ratio: $3,466.67 times 43% equals $1,491 minus $645 equals $846
$846 is the answer as it is the lower of the 2 ratios