In a construction loan scenario, what happens if the actual construction costs exceed the original loan amount?
Correct Answer
C) The borrower must provide additional funds or seek alternative financing
Construction loans have fixed amounts based on approved plans and budgets. Cost overruns require the borrower to provide additional funds from their own resources or obtain separate financing, as lenders do not automatically increase loan amounts.
Why This Is the Correct Answer
Construction loans have fixed amounts based on approved plans and budgets. Cost overruns require the borrower to provide additional funds from their own resources or obtain separate financing, as lenders do not automatically increase loan amounts.
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Previous Question
An MLO provides a borrower with a pre-qualification estimate without running credit or verifying income. Three months later, the borrower applies for a loan and is denied due to recent credit issues. The borrower claims the MLO misled them. What is the MLO's best defense?
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A 1099 contractor has been working for the same company for 18 months but only has one year of tax returns filed as self-employed. To use this income for qualification, the MLO must: