A borrower receives pre-qualification for a loan amount but later discovers they need additional funds for closing costs. They ask the MLO to include closing costs in the loan amount. What factor is most critical in this decision?
Correct Answer
D) Whether the property value supports the higher loan-to-value ratio
When increasing the loan amount to include closing costs, the primary constraint is typically the maximum loan-to-value ratio allowed by the loan program. The property must appraise for sufficient value to support the higher loan amount while staying within LTV limits, regardless of the borrower's income or credit qualifications.
Why This Is the Correct Answer
When increasing the loan amount to include closing costs, the primary constraint is typically the maximum loan-to-value ratio allowed by the loan program. The property must appraise for sufficient value to support the higher loan amount while staying within LTV limits, regardless of the borrower's income or credit qualifications.
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