Today we learnt about GDSR, Or Gross Debt Service Ratio
Basically, it answers the question "Can I afford to live here?"
It is a measure of financial well being only associated with housing
GDSR formula is GDSR = (Monthly Mortgage + Monthly Heating Costs + Monthly Property Tax) divided by ( monthly Gross household income) then you multiply all that by 100.
Your GDSR should NEVER exceed 32%
Mr. Max gave us an assignment to find out whether or not John can afford to buy a home, what the cost of the most expensive home he should be shopping for is, and, if he buys this home, how much interest he'd pay in the first year.
He also gave us a second case study, which is to do question #14 on the handout he gave us earlier.
Reminder: We have a test Tuesday
