Finance
A Michigan borrower's debt-to-income (DTI) ratio is important to lenders because it measures:
AThe ratio of property value to loan balance
BThe borrower's monthly debt obligations compared to gross monthly income✓ Correct
CThe ratio of down payment to purchase price
DThe interest rate compared to the national average
Explanation
DTI ratio = Total Monthly Debt Payments / Gross Monthly Income. Lenders use DTI to assess whether a borrower can manage additional debt. Conventional loans typically require DTI at or below 43-45%.
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