Finance
The Equal Credit Opportunity Act (ECOA) prohibits lenders from discriminating based on:
ACredit score and debt-to-income ratio
BRace, color, religion, national origin, sex, marital status, or age✓ Correct
CProperty location and loan amount only
DEmployment type and income source
Explanation
ECOA prohibits credit discrimination based on race, color, religion, national origin, sex, marital status, age, or because the applicant receives public assistance income.
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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.
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
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