A Colorado buyer who is self-employed applies for a mortgage. The lender typically requires the self-employed borrower to provide:
Why B. Two years of personal and business tax returns, a year-to-date profit and loss statement, and evidence that the business is ongoing Is Correct
Answer B: B. Two years of personal and business tax returns, a year-to-date profit and loss statement, and evidence that the business is ongoing
Exam Tip: Finance
Finance questions often involve calculations. Master the T-bar method, understand the difference between conventional and government-backed loans, and know key ratios like LTV and DTI.
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Key Terms to Know
A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Pre-ApprovalA lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Math Concepts
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