When calculating qualifying income for a borrower who receives both W-2 wages and 1099 income, which approach is most appropriate?
Correct Answer
C) Analyze each income source separately using appropriate guidelines for each type
When a borrower has multiple income sources, each type should be analyzed according to its specific guidelines. W-2 income follows employment income rules, while 1099 income follows self-employment income analysis requirements. Each must meet its respective documentation and history requirements.
Why This Is the Correct Answer
When a borrower has multiple income sources, each type should be analyzed according to its specific guidelines. W-2 income follows employment income rules, while 1099 income follows self-employment income analysis requirements. Each must meet its respective documentation and history requirements.
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An MLO is comparing a conventional loan with PMI versus an FHA loan for a borrower with 5% down payment. The conventional loan rate is 4.0% with 0.5% PMI, while the FHA rate is 4.25% with 0.85% MIP. What additional factor is crucial for an accurate comparison?