A borrower owns a rental property that generates $2,000 monthly rent. The property expenses are $800 per month. How should this rental income be calculated for qualifying purposes?
Correct Answer
D) Use $900 (75% of net rental income after expenses)
Rental income is calculated by taking 75% of the net rental income after expenses to account for vacancy and collection losses. In this case: ($2,000 - $800) × 0.75 = $900. This follows conventional lending guidelines.
Why This Is the Correct Answer
Rental income is calculated by taking 75% of the net rental income after expenses to account for vacancy and collection losses. In this case: ($2,000 - $800) × 0.75 = $900. This follows conventional lending guidelines.
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A borrower receives their Closing Disclosure on Tuesday and requests to close on Friday of the same week. The lender discovers a $50 increase in the title insurance fee on Thursday. What is the latest action the lender can take?
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