Question

Mandy has an annual salary of $37,580. Each month she has a car payment of $265 and a student loan of $120. If she applies for a home loan, how likely is it Mandy will be approved based on her debt-to-income ratio?

Answer 1

Answer: Not likely; recurring debt is higher than what is allowed.

Step-by-step explanation:

The options are:

a. Very likely; recurring debt is less than what is allowed.

b. Somewhat likely; recurring debt is equal to what is allowed.

c. Not likely; recurring debt is higher than what is allowed.

d. There is not enough information given to determine the answer.

Annual salary = $37,580

Car loan payment annually = $265 × 12 = $3180

Annual student loan= $120 × 12 = $1440

Annual loan payment will be:

= $3180 + $1440

= $4620

Based on the above, Mandy is already paying 12.3% (4620 / 37580)× 100 as loan every month. Coupled with the fact that he'll still have some amount to pay as loan every month, he won't be given as the recurring loan is higher than what will be allowed.

Answer 2

Answer:

c. Not likely; recurring debt is higher than what is allowed.

Step-by-step explanation:

got it right