Which of the following factors relates to the borrower's financial obligations and is important in mortgage approval?

The debt-to-income ratio is a key factor in mortgage approval because it provides insight into a borrower's ability to manage monthly payments and other financial obligations. This ratio compares a borrower's total monthly debt payments, including housing expenses and other debts, to their gross monthly income. Lenders use this metric to assess whether a borrower can afford the mortgage along with their existing debts.

A lower debt-to-income ratio indicates that a borrower has a manageable level of debt relative to their income, which is a positive sign for lenders assessing creditworthiness. Generally, most lenders prefer a debt-to-income ratio below a certain threshold, typically around 43%, although this can vary. This helps ensure that borrowers are not over-leveraged and can meet their financial commitments without undue stress.

While other factors like loan-to-value ratio, interest rates, and loan terms are significant in the overall mortgage process, they do not directly reflect the borrower's current financial obligations in the same way that the debt-to-income ratio does. The loan-to-value ratio measures the amount of the loan compared to the appraised value of the property, interest rates affect overall borrowing cost, and loan terms influence the duration and repayment structure of the loan. However, it's the debt-to-income ratio that specifically highlights