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Henri and Lila are looking at ways to borrow more money since the house they ideally want costs $150000 more than they had anticipated

Henri and Lila are looking at ways to borrow more money since the house they ideally want costs $150,000 more than they had anticipated ($450,000) They only have $50,000 to put down on this home If their restaurant was recently re-appraised at $950,000 after they made improvements and they put a mortgage on that property of $400,000, should they use their restaurant as the additional collateral? Their net monthly income from the restaurant is $7,200 a month and they applied to you for a loan at 6% but the interest rates are expected to move to 7% in the near future

You as a lender know that the preferred debt to loan ratio is 34%You are the lender to whom they have applied for a mortgage, would you make this loan and why based on this information? Respond to the following checklist items:

From the lender’s viewpoint:

  • Calculate the monthly payment to amortize the debt
  • Calculate debt ratio of loan to income
  • Discuss the factors in granting or not granting the loan

Respond from both the lender’s and borrowers’ viewpoints:

  • What are the risks and benefits involved for both parties? What are the ethical factors to be considered from the real estate professional’s perspective regarding recommendation of loan products?

Mar 24 2020 View more View Less

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