A borrower received a pre-qualification estimate of $250,000 but was only approved for $200,000 during the actual application process. What most likely caused this difference?
Correct Answer
B) The borrower's actual verified income was lower than self-reported
Pre-qualification is based on unverified, self-reported information. When actual documentation is provided during the application process, discrepancies between reported and verified income, debts, or credit history commonly result in different loan amounts than initially estimated.
Why This Is the Correct Answer
Pre-qualification is based on unverified, self-reported information. When actual documentation is provided during the application process, discrepancies between reported and verified income, debts, or credit history commonly result in different loan amounts than initially estimated.
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Previous Question
A borrower's loan receives a 'Caution' message from Loan Prospector (LP) indicating 'Review Income Documentation.' The borrower is self-employed and provided tax returns showing a loss in the most recent year but profits in the previous two years. What is the most appropriate next step?
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Which statement is correct regarding the tolerance rules when a revised Loan Estimate is issued due to changed circumstances?