you work for a lender that requires a 20% down payment and uses the standard debt - to - income ratio to…

you work for a lender that requires a 20% down payment and uses the standard debt - to - income ratio to determine a persons eligibility for a home loan. of the following, choose the person that you would rate the highest on their eligibility for a home loan.\n| | person a | person b | person c | person d |\n|--|--|--|--|--| \n| home value | $175,000 | $200,000 | $220,000 | $250,000 |\n| income | $51,000 | $58,000 | $63,000 | $67,000 |\n| savings | $35,000 | $40,000 | $42,000 | $50,000 |\n| recurring debt | $350 | $250 | $200 | $450 |\na. person a\nb. person b\nc. person c\nd. person d

you work for a lender that requires a 20% down payment and uses the standard debt - to - income ratio to determine a persons eligibility for a home loan. of the following, choose the person that you would rate the highest on their eligibility for a home loan.\n| | person a | person b | person c | person d |\n|--|--|--|--|--| \n| home value | $175,000 | $200,000 | $220,000 | $250,000 |\n| income | $51,000 | $58,000 | $63,000 | $67,000 |\n| savings | $35,000 | $40,000 | $42,000 | $50,000 |\n| recurring debt | $350 | $250 | $200 | $450 |\na. person a\nb. person b\nc. person c\nd. person d

Answer

Explanation:

Step1: Calculate down - payment for each person

The down - payment is 20% of the home value. For Person A: $0.2\times175000 = 35000$ For Person B: $0.2\times200000=40000$ For Person C: $0.2\times220000 = 44000$ For Person D: $0.2\times250000=50000$

Step2: Check if savings can cover down - payment

Person A: Savings = $35000$, Down - payment = $35000$, can cover. Person B: Savings = $40000$, Down - payment = $40000$, can cover. Person C: Savings = $42000$, Down - payment = $44000$, cannot cover. Person D: Savings = $50000$, Down - payment = $50000$, can cover.

Step3: Calculate debt - to - income ratio for eligible persons

The standard debt - to - income ratio is calculated as $\text{Debt - to - Income Ratio}=\frac{\text{Monthly Debt Payment}}{\text{Monthly Income}}$. Monthly income for Person A: $\frac{51000}{12}=4250$ Debt - to - income ratio for Person A: $\frac{350}{4250}\approx0.0824$ Monthly income for Person B: $\frac{58000}{12}\approx4833.33$ Debt - to - income ratio for Person B: $\frac{250}{4833.33}\approx0.0517$ Monthly income for Person D: $\frac{67000}{12}\approx5583.33$ Debt - to - income ratio for Person D: $\frac{450}{5583.33}\approx0.0806$

Step4: Compare debt - to - income ratios

Since a lower debt - to - income ratio indicates higher eligibility, Person B has the lowest debt - to - income ratio among the eligible persons.

Answer:

b. Person B