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8. Qualifying the Buyer M/C

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Questions and Answers

What is the primary purpose of the underwriting process in mortgage lending?

To calculate the property’s market value
To establish the repayment period of the loan
To assess whether the buyer and the property meet the lender’s standards (correct)
To determine the interest rate of the loan

Which of the following is a main consideration for an underwriter?

Net worth
Favorite color
Income
Credit reputation (correct)

What does a credit report primarily contain?

Educational background
Employment history
Information about loans, credit purchases, and repayments (correct)
Social media activity

What type of income is considered stable monthly income?

Income from a full-time permanent job (B) Signup and view all the answers

What does the debt-to-income ratio measure?

The relationship between monthly debt payments and pre-tax monthly income (B) Signup and view all the answers

What is the term for income that is expected to continue in the future and is reliable?

Durable income (C) Signup and view all the answers

Which of the following would likely be considered a red flag by an underwriter?

Recently opened bank accounts with high balances (B) Signup and view all the answers

What does an automated underwriting system typically provide?

Recommendations based on a risk classification (C) Signup and view all the answers

Which of the following is NOT a factor in determining creditworthiness?

Astrological sign (B) Signup and view all the answers

What is the relationship between expenses and income according to the text?

Expenses from income (B) Signup and view all the answers