Finance
What is the debt-to-income (DTI) ratio, and why is it important in mortgage underwriting?
AThe ratio of property taxes to income; determines tax deductions
BThe ratio of monthly debt payments to gross monthly income; used to assess repayment ability✓ Correct
CThe ratio of loan amount to appraised value; determines PMI requirement
DThe ratio of down payment to purchase price; determines loan type
Explanation
The DTI ratio compares total monthly debt payments to gross monthly income. Lenders use it to assess whether a borrower can manage monthly mortgage payments alongside other obligations.
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