please explain why please explain ratios used After reviewin

*please explain why* *please explain ratios used*

After reviewing matt and Jennifer’s personal statement of cash flows, the following information was determined: Mortgage principal $5,467

The couple has monthly gross income of $9,500. According to benchmarks set by mortgage lenders, has this couple taken on debt in excess of what is reasonable for their income?

Solution

According to the benchmark set by the mortgage lenders this couple is taken on debt by mortgage lenders as we clearly see from the given figures that even the mortgage principal is only $5467 but the mortgage interest is of very high amount that is $21500 ans his gross income of both is $9500 monthly that means 114000 yearly. So as per this data they are easily payable the amount even with a property tax is also given in data of $2000 and homeowners insurance premium that is $1800 if we see the total of the amount is 30767$ including interest principal premium and property tax and all this is only 26.98% of his annual income . So they can easily pay the debt not a big issue for them

The ratio that is used is the total cashflows divide by total annual income is used in it.

Even the limit is extend for some amount that can also be reasonable for them not a big issue.