Finance
A lender's underwriting process for a mortgage typically evaluates which of the following 'three C's'?
ACredit, Capacity, Collateral✓ Correct
BCash, Character, Contracts
CCapital, Commission, Compliance
DCredit, Collateral, Construction
Explanation
Mortgage underwriting evaluates the three C's: Credit (credit history and score), Capacity (income and DTI), and Collateral (the property's value relative to the loan).
People Also Study
Related Alabama Questions
- Which type of loan insures the lender against loss and allows borrowers to purchase with as little as 3.5% down with a 580+ credit score?Finance
- A lender who charges a fee for processing, originating, and underwriting a mortgage loan is charging a(n):Finance
- In Alabama, what instrument is primarily used to secure a mortgage loan with real property as collateral?Finance
- Under Alabama mortgage law, a lender's right to demand full loan repayment if the property is sold is called a(n):Finance
- A property is listed with an asking price of $375,000. The appraiser's market value conclusion is $350,000. The lender will base the loan on:Property Valuation
Key Terms to Know
Debt-to-Income Ratio (DTI)
A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Pre-ApprovalA lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Math Concepts
State-Specific Concepts
Continuing Education
Study This Topic
Practice More Alabama Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Alabama Quiz →