Unit 6 Flashcard 2 Bell Ringer

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What is the back-end ratio in mortgage calculations?

Back

The back-end ratio is a measure of a borrower's total monthly debt payments divided by their gross monthly income, expressed as a percentage. It includes all debt obligations such as mortgage payments, car loans, and credit card bills.

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How do you calculate the back-end ratio?

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To calculate the back-end ratio, add up all monthly debt payments and divide by the gross monthly income. Multiply the result by 100 to get a percentage.

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What is the front-end ratio in mortgage calculations?

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The front-end ratio is a measure of a borrower's housing expenses (including mortgage payments, property taxes, and insurance) divided by their gross monthly income, expressed as a percentage.

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How do you calculate the front-end ratio?

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To calculate the front-end ratio, add up all housing-related expenses and divide by the gross monthly income. Multiply the result by 100 to get a percentage.

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What is the formula for calculating area?

Back

Area = Length x Width. For irregular shapes, the area can be calculated using various geometric formulas or integration.

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What is a scale in floor plans?

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A scale is a ratio that represents the relationship between the dimensions of a drawing and the actual dimensions of the object. For example, 1/2 inch = 1 foot means that every 1/2 inch on the drawing represents 1 foot in reality.

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How do you convert feet to inches using a scale?

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To convert feet to inches using a scale, multiply the length in feet by the scale factor. For example, a room that is 26 feet long at a scale of 1/2 inch = 1 foot would be 26 x 0.5 = 13 inches on the floor plan.

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What is the significance of APR in mortgages?

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APR (Annual Percentage Rate) represents the yearly cost of borrowing, including interest and fees, expressed as a percentage. It helps borrowers understand the true cost of a loan.

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How do you calculate the interest portion of a mortgage payment?

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To calculate the interest portion of a mortgage payment, multiply the remaining loan balance by the monthly interest rate (annual rate divided by 12).

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What is homeowners insurance?

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Homeowners insurance is a type of property insurance that covers losses and damages to an individual's home and assets in the home. It typically includes coverage for theft, fire, and certain natural disasters.