In Ascertaining Whether a Borrower Has the Ability to Pay

question 13

Multiple Choice

In ascertaining whether a borrower has the ability to pay off his loan over time, a mortgage bank may rely on calculating a total debt ratio as part of its underwriting process. Utilizing the following information, calculate the total debt ratio. Monthly principal and interest on mortgage loan: $635, Monthly Tax and insurance payments into escrow: $125, Monthly Car lease payment (lease term is 3 years) : $350, Gross monthly income: $2,500

• A) 25.4%
• B) 30.4%
• C) 44.4%
• D) 53.2%

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Definitions:

GEO

Geostationary Earth Orbit; a circular orbit 35,786 kilometers above the Earth's equator and following the direction of the Earth's rotation.

LEO

Low Earth Orbit, referring to satellites that orbit the Earth at altitudes between 160 to 2,000 kilometers, primarily used for telecommunications and earth observation.

MEO

Medium Earth Orbit, a region of space around Earth located above low Earth orbit (LEO) and below geostationary orbit (GEO), often used for satellites that require broader coverage than LEO and more precision than GEO.

VEO

Stands for Violent Extremist Organizations, groups that use or advocate for violence to achieve political, ideological, or religious goals.