Unit 9: The Buyer and the Property Showing

Question 1

Define Front-end ratio

Answer 1

refers to the ratio of a buyer’s housing costs to income. For many institutional lenders, the front-end ratio is 28%, which means the buyers’ total monthly housing costs (principal, interest, taxes, and insurance {PITI} cannot exceed 28% of their gross income.

Question 2

Front-end ratio

Answer 2

Total Monthly Payment/ Gross Monthly Income= 28% or less

Question 3

Define Back-end ratio

Answer 3

A person’s total housing expense plus long-term debt obligations cannot exceed 36% of gross income

Question 4

Back-end ratio

Answer 4

PITI+ total monthly credit obligations/ gross monthly income= 36% or less

Question 5

PITI

Answer 5

Principal, interest, taxes, and insurance

Question 6

Callers from a For Sale sign are likely to be

Answer 6

Satisfied with the area and satisfied with the general exterior appearance.

Question 7

The qualifying process includes

Answer 7

the buyers’ motivation, the buyers’ needs and interests, and down payment they can make, and the amount they can finance.

Question 8

The front-end loan qualifying ratio is the ratio of

Answer 8

Gross housing cost to gross income

Question 9

The back-end qualifying ratio refers to the ratio of

Answer 9

Total housing expense plus long-term debt to gross income.