Contributed by nickel | April 20, 2006 12:35 PM PST
I learned something interesting today... If your credit is good enough, some mortgage lenders will approve mortgages that bring you up to a 50% back-end ratio. In case you're wondering what that means, your front-end ratio is your total monthly mortgage payment vs. you gross monthly income, whereas your back-end ratio is your total monthly debt obligations vs. gross monthly income. Is it just me, or is that an insane amount of debt to be carrying? Crazy stuff.
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"The Lengths to Which Mortgage Lenders Will Go" was first published at fivecentnickel.com Enjoy the latest personal finance news and commentary at PFBlog Network.
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This weekend my wife and I met with a banker at a small community bank to get a loan for a new house (80% LTV, $111,000 purchase price, 15yr amortization), and out of curiosity, I asked the banker what was the highest back-end ratio she had seen lately. She said that recently a 56% back-end loan was made to a 23yr old waitor. She said the mitigating factors were that 1) the loan was being sold off to Washington Mutual 2) they assumed the waitor wasn't reporting all of his income on his tax return and 3) his FICO was 800.
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