Chapter 15: Finance Practical Applications

Question 1

What is the definition of pre-qualified?

Answer 1

the buyer gives info to the lender to their income, debts, and assets

Question 2

What is the definition of pre-approval?

Answer 2

more involved application plus a credit report

Question 3

What is the front-end ratio?

Answer 3

compares monthly income to a house payment

Question 4

What is the back-end ratio?

Answer 4

compares monthly income to the monthly house payment plus all debt

Question 5

What is automated underwriting?

Answer 5

determines the maximum LTV ratio based on the merits of each individual borrower