Consolidating credit card debt definition online mmo 3d dating

It is important because it denotes how much of the borrower's income has someone else's name on it.If a high percentage of an applicant's paycheck goes to debt payments every month, the applicant is considered a high-risk borrower, as a job loss or income reduction could cause unpaid bills to pile up in a hurry.The back-end ratio is calculated by adding together all of a borrower's monthly debt payments and dividing the sum by the borrower's monthly income.

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Therefore, the front-end ratio is calculated by dividing only the borrower's mortgage payment by his monthly income.

Returning to the example above, assume that out of the borrower's $2,000 monthly debt obligation, his mortgage payment comprises $1,200 of that amount.

The borrower's front-end ratio, then, is ($1,200 / $5,000), or 24%.

This borrower's back-end ratio, then, is ($2,000 / $5,000), 40%.

Generally, lenders like to see a back-end ratio that does not exceed 36%; however, there are lenders who make exceptions for ratios of up to 50% for borrowers with good credit.

Some lenders consider only this ratio when approving mortgages, while others use it in conjunction with the front-end ratio.Like the back-end ratio, the front-end ratio is another debt-to-income comparison used by mortgage underwriters, the only difference being the front-end ratio considers no other debt than the mortgage payment.The back-end ratio, also known as the debt-to-income ratio, is a ratio that indicates what portion of a person's monthly income goes toward paying debts.Total monthly debt includes expenses such as mortgage payments (principal, interest, taxes and insurance), credit card payments, child support and other loan payments.Lenders use this ratio in conjunction with the front-end ratio to approve mortgages.The back-end ratio represents one of a handful of metrics that mortgage underwriters use to assess the level of risk associated with lending money to a prospective borrower.

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