Mortgage Underwriting and Financial Calculations 4

Question 1

What does it mean when a loan is 'underwater' or has 'negative equity'?

Accepted Answer

The outstanding loan balance exceeds the property's current market value

Answer

The borrower's DTI exceeds agency guidelines

Answer

The interest rate is below the current market rate

Answer

The property's assessed tax value exceeds the purchase price

Question 2

When calculating the monthly payment on a $250,000 loan at 6% for 30 years, which component is NOT included in PITI?

Accepted Answer

Utility bills

Answer

Principal repayment

Answer

Interest charges

Answer

Homeowner's insurance premium

Question 3

A borrower has $50,000 in student loans on income-driven repayment (IDR) showing a $0 monthly payment. Under Fannie Mae guidelines, how is this treated for DTI?

Accepted Answer

1% of the balance ($500) is used

Answer

$0 is used as the monthly payment

Answer

The standard amortized payment over 10 years is used

Answer

The loan is ignored entirely

Question 4

What is an 'automated underwriting system' (AUS) finding of 'Approve/Eligible' vs. 'Refer'?

Accepted Answer

Approve/Eligible means the loan meets guidelines; Refer means a human underwriter must review it

Answer

Approve/Eligible means the file is denied; Refer means it needs manual review

Answer

Both findings require the same level of documentation

Answer

Refer means the loan is approved with conditions

Question 5

Which calculation correctly determines the amount of mortgage insurance premium (MIP) on an FHA loan?

Accepted Answer

Base loan amount × annual MIP rate / 12 months

Answer

LTV × loan term

Answer

Purchase price × 0.85%

Answer

Down payment × mortgage insurance factor

Question 6

A property's NOI (Net Operating Income) is $36,000 per year and the annual debt service is $30,000. What is the Debt Service Coverage Ratio (DSCR)?

Accepted Answer

1.20

Answer

0.83

Answer

1.02

Answer

1.50

Question 7

When documenting alimony income for qualifying purposes, lenders typically require evidence that payments will continue for how long?

Accepted Answer

3 years

Answer

6 months

Answer

12 months

Answer

5 years