week 4 Tuesday

Question 1

Stress Test

Answer 1

lenders making sure homebuyers have a cushion to be able to continue servicing mortgages even in a higher interest rate enviornment

Question 2

Qualify Rate (QR)

Answer 2

Is the higher of the two rates one is a floor rate and the other is a contract rate +2%

Question 3

Contract rate

Answer 3

the actual rate you have negotiated with the lender

Question 4

Gross Debt Service Ratio GDS formula

Answer 4

= (PI + T+ H + 50% of condo fees if applicable/Gross income) *100

Question 5

PI

Answer 5

=monthly
PMT)

Question 6

T

Answer 6

monthly property taxes

Question 7

H

Answer 7

Monthly heating costs

Question 8

Total Debt Service Ratio TDS

Answer 8

(PI + T + H + 50% of condo fees (if applicable) + D/GI) *100

Question 9

afforadable monthly mortage payment forumla =

Answer 9

GI x Gds or Tds ratio - monthly costs = affordable monthly mortgage payments

Question 10

Afforadable Home pUrchase price =

Answer 10

afforadble monthly mortgage PMt, I% based on qualify rate, N, FV= 0 Cpt PV = afforadable mortgage amount + down payment = affordable homepurchase price