Finance
A NH lender's underwriting process evaluates a borrower's creditworthiness through which primary factors?
AAge, marital status, and employer size
BCredit score, income, assets, and the property's collateral value (the four Cs: credit, capacity, capital, collateral)✓ Correct
COnly credit score and employment history
DOnly DTI and down payment amount
Explanation
Mortgage underwriting examines the four C's: Credit (score and history), Capacity (income and DTI), Capital (assets and down payment), and Collateral (the appraised property value). All four are evaluated together.
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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.
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.
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.
Math Concepts
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