Prequalifying Basics is designed to give originators new to the mortgage banking industry an understanding of the basics concepts of prequalification. The course begins with a look at how to conduct an initial interview with an applicant. The following lessons define, describe, and demonstrate calculation of the loan-to-value ratio, the monthly mortgage payment, and the qualification ratios. The course also addresses loan affordability and calculation of how much the applicant can afford to borrow. This course is designed for new originators who are seeking an understanding of the basic concepts of prequalification.

Course Outline:

Lesson 1 - Information Gathering

• Fair Lending During Initial Contact and Prequalification
• Questions to Ask the Applicant
• Documentation Review
• Preliminary Credit Report and Credit Score
• Preliminary Selection of a Mortgage Loan
• Case Studies

Lesson 2 - Borrower Equity and the Loan-to-Value Ratio

• How to Calculate the LTV
• LTV Example
• LTV Practice 1
• LTV Practice 2
• LTV Practice 3
• Equity and the LTV
• LTV Guidelines
• Case Studies

Lesson 3 - The Monthly Mortgage Payment

• PITI + HOA
• How to Calculate the Monthly Mortgage Payment
• Step 1 - Calculate Principal and Interest
• Step 1 Practice
• Step 2 - Calculate Real Estate Taxes
• Step 2 Practice
• Step 3 - Calculate Homeowners' Insurance
• Step 3 Practice
• Step 4 - Calculate Mortgage Insurance
• Step 4 Practice
• Step 5 - Calculate Homeowners Association Fees
• Step 5 Practice
• Step 6 - Add All Calculations Together
• Step 6 Practice
• Case Studies

Lesson 4 - Qualification Ratios and Loan Affordability

• Gross Monthly Income
• Housing Ratio
• VA Residual Income
• Debt Ratio
• Ratio Calculation Practice
• Using the Qualification Ratios to Select a Loan
• Using Qualification Ratios to Select a Loan - Example
• When Ratios Are Too High
• Loan Affordability
• Loan Affordability Worksheet
• Using the Loan Affordability Worksheet
• Case Studies

Course Credit:
Completion of this course earns five points toward MBA's Certified Mortgage Banker (CMB), or Certified Mortgage Technologist (CMT) designations.