RE-160 Chapter Notes - Chapter 1: Alimony, Life Insurance, Mortgage Insurance

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The process is the same regardless of the type of mortgage involved. Goal is to determine whether the loan-to-value ratio, the payment-to-income ratio, assets of the borrower and credit history are acceptable to the lender/insurer. Borrower is requested to allow the lender to; verify place of employment, verify wages and inquire employment status. Other possible sources of income are also verified; part-time employment, working spouse, rentals, alimony or child support, commissions, self-employment, bonuses, dividends and interest, retirement annuity and public assistance. The tests in establishing borrower income would be the continuity of income and verifiability of income via tax authorities. Variable income which may be difficult to verify and assess is averaged over a specified period of time. In case of two individuals judgment must be made relating to the future stability of the joint income: verification of borrower income. Borrower assets must be at least sufficient to close the transaction i. e. pay closing costs and make down payment.

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