You are a credit counselor for a small bank You are examinin

You are a credit counselor for a small bank You are examining a loan application for a $30,000 home equity loan. According to the policy, a customer\'s annual income-to-debt t for all credit other than the primary mortgage must be at least 4:1 to issue this type of loan. If the client\'s debt is $8,000, what is the minimum income for which you can approve his loan? $12,000 $32,000 $40,000 $48,000 $120,000

Solution

Ratio of income to debt must be 4:1. Debt is $8000 so the annual income must be at least 4*8000=$32000