Finance
A West Virginia borrower who is self-employed applying for a mortgage must typically provide:
AOnly the most recent pay stub
BTwo years of personal and business tax returns, plus a current profit and loss statement✓ Correct
CA letter from their accountant estimating future income
DOnly a bank statement from the past 30 days
Explanation
Self-employed borrowers must document their income more extensively than salaried employees. Lenders typically require two years of personal and business tax returns and a year-to-date profit and loss statement to verify stable self-employment 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.
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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