Finance
What is the 'front-end ratio' in Delaware mortgage qualification?
AThe ratio of the down payment to the total purchase price
BThe ratio of housing costs (PITI) to gross monthly income, used to assess affordability of the proposed mortgage✓ Correct
CThe interest rate charged in the first year of an ARM
DThe ratio of principal to total payment in the first year
Explanation
The front-end ratio (housing ratio) = Monthly PITI ÷ Gross Monthly Income. Most conventional lenders look for a front-end ratio of 28% or less, ensuring the housing payment doesn't overburden the borrower's income.
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