A renovation loan borrower wants to add a swimming pool to their existing home improvement project after construction has already begun. The pool addition would increase the total project cost by 40% above the original loan amount. What is the correct procedure?
Correct Answer
D) The borrower must complete a new loan application for the entire project
A 40% increase in project scope represents a material change that typically requires a new loan application, updated appraisal, and complete re-underwriting. Such significant changes go beyond minor modifications and require full re-evaluation of the borrower's capacity and the project's viability.
Why This Is the Correct Answer
A 40% increase in project scope represents a material change that typically requires a new loan application, updated appraisal, and complete re-underwriting. Such significant changes go beyond minor modifications and require full re-evaluation of the borrower's capacity and the project's viability.
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A borrower's credit score drops from 740 to 680 between the initial application and underwriting review. This change affects the interest rate from 4.25% to 4.75%. What action must the lender take regarding the Loan Estimate?
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A borrower obtained a conventional loan with 5% down payment in 2020. The borrower has made all payments on time and wants to cancel PMI. What additional requirement might the lender impose beyond reaching 80% LTV?