Front and back end ratios is two types of debt expressed as a percentage os your GROSS monthly income.
The front end ratio is the sum of your monthly mortgage payment including taxes and insurance ( Principal interest taxes and insurance or PITI) as a percentage of your gross monthly income.
If you make $10,000 per month and your payment is $2,000 your front end ratio is 20%.
The back end ratio takes the sum of your PITI and the minimum monthly payments on your credit cards, your car payments, your student loans and any other monthly debt that shows on your credit report, then expresses that total as a percentage of your gross monthly income.
If in the above example you have two $500 car payments and $500 per month in credit card and student loan payments, your back end ratio is now $3500/$10,000 which is 35%.
Call me and I'll tell you what you can afford.
Cornerstone Lending Inc
720 Second St Pike Suite 104
Southampton Pa 18966
Office 215 953 0800
Fax 215 953 1706
Cell 267 992 7276
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