Cryptocurrency Q&A
What is the golden rule of mortgage?
What is the golden rule of mortgage?
Ilaria
Wed Oct 09 2024
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7 answers
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The golden rule of mortgage refers to a fundamental principle in lending and borrowing, which essentially states that the borrower should make payments on their mortgage loan in a timely and responsible manner. This ensures that the lender is repaid for the funds lent, while the borrower retains ownership of the property as long as they meet their financial obligations.
7 answers
KimonoElegant
Fri Oct 11 2024
The 28% / 36% rule is a fundamental guideline in financial lending, particularly when it comes to mortgages and other forms of debt. It serves as a benchmark for lenders to assess the borrower's ability to repay their loans.
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JejuSunshineSoulMateWarmth
Fri Oct 11 2024
The rule comprises two key calculations: the front-end ratio and the back-end ratio. Both of these ratios are crucial in determining the borrower's financial health and their capacity to manage their debts effectively.
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alexander_clark_designer
Fri Oct 11 2024
The front-end ratio, also known as the housing expense ratio, dictates that no more than 28% of the borrower's gross monthly income should be allocated towards housing costs. This includes mortgage payments, property taxes, insurance premiums, and any other associated expenses.
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GinsengBoostPowerBoostVitality
Thu Oct 10 2024
On the other hand, the back-end ratio, also referred to as the total debt-to-income ratio, sets a limit of 36% on the total amount of debt that a borrower can carry. This includes not just housing costs but also other debts such as credit card balances, auto loans, student loans, and personal loans.
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Valentina
Thu Oct 10 2024
The 28% / 36% rule is designed to ensure that borrowers do not overextend themselves financially. By adhering to these ratios, borrowers can maintain a healthy financial balance and avoid falling into debt traps.
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