Finance
The debt-to-income (DTI) ratio used in Oklahoma mortgage underwriting measures:
AThe ratio of the loan amount to the property value
BThe ratio of the borrower's monthly debt payments to their gross monthly income✓ Correct
CThe ratio of equity to total debt
DThe ratio of property taxes to annual income
Explanation
The DTI ratio compares the borrower's total monthly debt obligations to their gross monthly income. Conventional lenders typically prefer a DTI no higher than 43-45%, though standards vary by loan type.
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Key Terms to Know
Debt-to-Income Ratio (DTI)
A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Pre-ApprovalA lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
Math Concepts
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