A borrower has been self-employed for 3 years. Their Schedule C shows: Year 1: $40,000 net, Year 2: $35,000 net, Year 3: $30,000 net. How should this income trend be analyzed?
Correct Answer
D) The declining trend requires additional analysis and may not be acceptable
A consistent declining income trend for self-employed borrowers raises concerns about the stability and continuance of income. Lenders typically require additional analysis and may not accept the income or require a lower qualifying amount when there's a clear declining pattern.
Why This Is the Correct Answer
A consistent declining income trend for self-employed borrowers raises concerns about the stability and continuance of income. Lenders typically require additional analysis and may not accept the income or require a lower qualifying amount when there's a clear declining pattern.
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A lender issues a Loan Estimate on Monday. On Wednesday, the borrower emails expressing intent to proceed. On Thursday, the property appraisal comes in $20,000 lower than expected, requiring a loan amount reduction. When must a revised Loan Estimate be provided if one is issued?
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A borrower's loan amount increases from $300,000 to $330,000 due to additional requested cash-out, changing the loan from conforming to jumbo. This occurs 6 days after the initial Loan Estimate. The lender: