Finance
A NJ lender requires a 'two-year history of self-employment income.' This requirement comes from:
ANJ DOBI regulations specifically
BFannie Mae/Freddie Mac underwriting guidelines for conventional loans✓ Correct
CThe NJ Residential Mortgage Lending Act
DFederal Reserve requirements
Explanation
Fannie Mae and Freddie Mac (the GSEs) require a two-year history of self-employment income to be documented and verified before it can be used in qualifying a borrower for a conventional mortgage.
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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.
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.
Deed of TrustA security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.
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