For a self-employed borrower, which of the following would NOT be added back to net income when calculating qualifying income?
Correct Answer
C) Principal payments on business debt
Principal payments on business debt represent actual cash outflow and are not added back to income. Depreciation, business use of home, and one-time equipment purchases are non-cash or non-recurring expenses that can typically be added back to increase qualifying income.
Why This Is the Correct Answer
Principal payments on business debt represent actual cash outflow and are not added back to income. Depreciation, business use of home, and one-time equipment purchases are non-cash or non-recurring expenses that can typically be added back to increase qualifying income.
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A borrower calls an MLO at 9 PM on a Friday requesting immediate disclosure of their APR calculation methodology for a loan they applied for earlier that week. The MLO has not yet provided the Loan Estimate. What is the MLO's obligation regarding this request?
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A self-employed borrower provides tax returns showing significant depreciation deductions that reduce their reported income. For PMI qualification purposes, how should this income be calculated?