When calculating the maximum home price using either the front ratio or the back ratio, one result is the maximum monthly payment the household can sustain. This amount covers:_____

a. Principal, interest, and escrow for taxes and insurance
b. The annual mortgage payment
c.The before-tax cash flow
d. The break-even occupancy level
e. The debt service coverage ratio

Question

03-03-2020
Business

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When calculating the maximum home price using either the front ratio or the back ratio, one result is the maximum monthly payment the household can sustain. This amount covers:_____

a. Principal, interest, and escrow for taxes and insurance
b. The annual mortgage payment
c.The before-tax cash flow
d. The break-even occupancy level
e. The debt service coverage ratio

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osondumartins osondumartins · Answer 1 · 2020-03-03T15:26:05+01:00

Answer:A. Principal, interest, and escrow for taxes and insurance

Explanation: Front-end ratio is a percentage of your total annual gross income which can be dedicated to the payment of your home loan monthly.

Back-end ratio is a term used to describe the total percentage of your annual gross income which you can put into the servising of your debts.

The maximum monthly payment which a household can sustain covers the PRINCIPAL, INTEREST, AND ESCROW FOR TAXES AND INSURANCE When calculating the maximum home price using either the front ratio or the back ratio.