Finance
Which term describes the process of a lender verifying a borrower's income, assets, credit, and employment before approving a Mississippi mortgage loan?
APre-qualification
BUnderwriting✓ Correct
CLoan origination
DAppraisal
Explanation
Underwriting is the process by which a lender's underwriter reviews and verifies the borrower's financial information to determine whether the loan meets the lender's guidelines and should be approved.
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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.
AppraisalA professional estimate of a property's market value prepared by a licensed or certified appraiser.
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.
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