During processing, it's discovered that the borrower's earnest money deposit was made with funds from a credit card cash advance. What is the primary concern for underwriting?
Correct Answer
B) The cash advance represents undisclosed debt that affects DTI calculations
A credit card cash advance creates new debt that must be included in the borrower's debt-to-income ratio calculations. This undisclosed debt could significantly impact the borrower's qualifying ratios and loan approval. The debt must be properly documented and included in underwriting analysis.
Why This Is the Correct Answer
A credit card cash advance creates new debt that must be included in the borrower's debt-to-income ratio calculations. This undisclosed debt could significantly impact the borrower's qualifying ratios and loan approval. The debt must be properly documented and included in underwriting analysis.
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A borrower has an interest-only mortgage with a current balance of $400,000. They want to refinance to a fully amortizing loan with the same balance of $400,000 but need an additional $3,000 for closing costs, making the new loan $403,000. How should this transaction be classified?
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A borrower has a 5/1 ARM with a 2/2/5 cap structure and a start rate of 3.5%. After the first adjustment, the fully indexed rate is 7.8%. What is the maximum rate the borrower can be charged at the first adjustment?