Finance
In South Carolina, what is 'credit scoring' and how does it affect mortgage lending?
AA method for scoring real estate agents' performance
BA numerical assessment of a borrower's creditworthiness based on credit history, used by lenders to determine loan eligibility and terms✓ Correct
CA property's credit score based on its rental history
DA lender's assessment of property condition
Explanation
Credit scoring (FICO scores) measures a borrower's creditworthiness based on payment history, amounts owed, credit history length, new credit, and credit mix. Higher scores lead to better loan terms and lower interest rates.
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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.
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.
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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