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.
More Origination Questions
A borrower has a construction-to-permanent loan with a 12-month construction phase. At month 10, construction is only 60% complete due to delays. What is the most likely outcome?
For a construction-to-permanent loan, when must the initial Closing Disclosure be provided for the construction phase?
During a refinance transaction, the appraiser determines that significant unpermitted additions were made to the property. The appraiser wants to discuss this with the MLO before finalizing the report. What should the MLO do?
An appraiser discovers that a property has significant foundation issues that were not disclosed. The appraiser reduces the property value by $25,000 and includes detailed comments about the structural problems. The loan officer is upset because this will kill the deal. Under AIR, the loan officer:
An MLO's compensation structure includes higher payments for certain loan products. When is it acceptable to recommend these higher-compensated products?
An MLO provides pre-qualification based on a borrower's current employment but learns the borrower is starting a new job next month with a $10,000 salary increase. How should this information be handled?
An MLO issues a pre-approval letter that states 'subject to satisfactory appraisal and final underwriting approval.' The borrower uses this letter to make an offer, but the appraisal comes in $15,000 below the purchase price. What is the lender's obligation?
A borrower submits a mortgage application on Monday at 2:00 PM. The lender determines the application is complete on Wednesday at 10:00 AM. What is the latest day the Loan Estimate must be delivered to comply with TRID requirements?
How long is a typical pre-approval letter valid?
A borrower requests a rate lock on a construction-to-permanent loan where the construction phase is 8 months and the permanent phase begins immediately after. The lender's rate lock policy allows maximum 120-day locks. How should the MLO handle this situation?
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