Mortgage Underwriting and Financial Calculations 3

Question 1

Which type of income is typically NOT usable for qualifying purposes without a two-year history?

Accepted Answer

Overtime income received for less than 12 months

Answer

Base salary from W-2 employment

Answer

Social Security retirement benefits

Answer

Pension income

Question 2

What is the purpose of the residual income analysis in VA loan underwriting?

Accepted Answer

To ensure the borrower has sufficient income after major expenses to meet living costs

Answer

To calculate the funding fee amount

Answer

To verify the veteran's assets after closing

Answer

To determine the maximum loan amount

Question 3

A lender is using the FICO score for mortgage underwriting. Which bureau score is typically used when three bureaus are pulled?

Accepted Answer

The middle of the three scores

Answer

The highest of the three scores

Answer

The lowest of the three scores

Answer

The average of the three scores

Question 4

Which asset type is considered a 'liquid asset' acceptable for reserves and closing costs?

Accepted Answer

Checking and savings account balances

Answer

Unvested stock options

Answer

Real estate equity

Answer

A 401(k) with a 10% early withdrawal penalty

Question 5

An interest-only loan allows the borrower to pay only interest for a set period. How does this affect underwriting qualification?

Accepted Answer

The borrower qualifies based on the fully amortized principal and interest payment

Answer

The borrower qualifies based on the interest-only payment permanently

Answer

The qualifying rate is reduced by 1%

Answer

DTI limits are relaxed for interest-only loans

Question 6

What is 'cash-out refinance' and how does it affect LTV?

Accepted Answer

Refinancing for more than the current balance to receive funds, which increases LTV

Answer

Refinancing with a lower loan balance, which decreases LTV

Answer

Replacing an ARM with a fixed rate, with no change to LTV

Answer

Paying down the principal to eliminate PMI, decreasing LTV

Question 7

A borrower's gross monthly income is $8,000. The maximum PITI using a 28% front-end ratio would be:

Accepted Answer

$2,240

Answer

$1,920

Answer

$2,080

Answer

$2,400