A borrower receives a pre-qualification for $300,000 but later applies for a $350,000 loan. The MLO discovers the borrower has been making monthly payments on a student loan that wasn't disclosed during pre-qualification. How does this impact the application process?
Correct Answer
B) The undisclosed debt must be factored into the debt-to-income calculation for the new loan amount
Under the Ability-to-Repay rule, all monthly debt obligations must be included in the debt-to-income calculation. The pre-qualification was based on incomplete information, and the actual application must include all debts to ensure compliance with QM standards.
Why This Is the Correct Answer
Under the Ability-to-Repay rule, all monthly debt obligations must be included in the debt-to-income calculation. The pre-qualification was based on incomplete information, and the actual application must include all debts to ensure compliance with QM standards.
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