ACTIVITY: Final Paper – Part 3 (Borrower Qualifications)
For the next part of your final paper project, you will be writing the sections regarding your borrowers and their qualifications for the mortgage loan.  For this activity, you will write another section for your final paper.  We are diving into the mortgage loan scenario by describing the property and assessing the prospective borrower.
As a successful top-producing real estate mortgage lender, write two paragraphs about the borrower qualifications. Answer the questions below in complete sentences, writing 5 sentences for each of the two paragraphs.  Use the mock data you downloaded and saved to your computer.  Remember to SAVE a copy of this assignment submission to insert into your final paper template.
Scroll down to see the template, a sample activity, and a step-by-step video.  Here’s the data sheet again, in case you did not save it from Module 4 Activity:
Instructions
First, read the textbook Chapters 13 & 14 (yes I know we are skipping ahead a few chapters).
Next, using the mock data found in the profile sheet, write 2 paragraphs with facts about the borrower’s loan scenario and financial calculations.  Write 2 paragraphs with facts about the borrower’s loan qualifications.  Answer the following questions (shown in the template) using complete sentences.  Each paragraph must have 5 sentences.  In each paragraph, insert the textbook page number in parenthesis.
Insert textbook pages from Chapters 13 and 14 in parenthesis (one citation per paragraph).
TEMPLATE





Borrower Qualifications
In the first paragraph, name the borrowers.  Analyze the borrower’s loan qualifications.  What is each borrower’s monthly gross income (paycheck before taxes)?  What is the borrower’s monthly consumer debt payments?  What are the borrowers’ FICO credit scores?  Do they have any foreclosures, bankruptcies, or judgments that would disqualify them from a mortgage loan?  Cite the textbook (Chapter 13 or 14).
In the second paragraph, discuss the borrowers’ mortgage loan scenario.  What type of loan is the borrower applying for (either an FHA or a conventional loan)?  State the amount financed.  What is the interest rate?  Based on the amount financed and the interest rate, how much are the monthly payments?   Cite the textbook (Chapter 13 or 14).  What documentation will each borrower be required to provide?  The textbook gives two basic types of documentation required. #1. Income verification (pages 343-344; 347).  #2. Bank statements (pages 349-350).  In addition, the borrower will need a credit report explanation if credit is less than perfect (pages 357-358).
Additional Resources
buy_vs_rent_comparison.xlsx Download buy_vs_rent_comparison.xlsx 
buyers_cost_estimate.xlsx Download buyers_cost_estimate.xlsx 
buyers_qualification.xlsx Download buyers_qualification.xlsx 
loan_comparison.xlsx Download loan_comparison.xlsx 
Example
The model assignment below is to help you get started.  DO NOT COPY the wording.  Please analyze the assignment for yourself, and write in your own words.  DOWNLOAD THE MOCK DATA PROVIDED AND USE THOSE NUMBERS.
The borrower, Mickey Mouse and Minnie Mouse, meet the qualifications for their mortgage loan.  Mickey’s monthly gross income (paycheck before taxes) is $4,570 from his job at Tile Manufacturing Plant.  Minnie has two sources of income:  $____ at _______ and $____ at _______  for a total of $________.  Combined that is $____________ for both borrowers.  Their combined monthly consumer debt payments are __________.  Mickey’s FICO credit score is _____, while Minnie’s FICO score is ____.  They do not appear to have any foreclosures, bankruptcies, or judgments that would disqualify them from a mortgage loan (Page 321). (TOTAL OF 5 SENTENCES)
The borrowers have applied for an FHA mortgage loan, which is a government-insured loan, from their local bank.  The mortgage interest rate is extremely low at _____%.   Based on the amount financed of $___________, the interest rate, and a 30-year amortized mortgage with a fixed payment, the monthly payments would be $_______ for principal and interest.  Each borrower be required to provide specific documentation as follows: ______________________(name one or two specific types of income and asset documentation) (Page 123).
Borrower & Mortgage Loan
Profile – Mock Data
BRE-126 Real Estate Finance
Victor Valley College
Spring 2021 Term
Professor Regina Brown
Tracking Table
Mock data provided by instructor for completing the 1003 loan application form.
Students are welcome to create and insert different mock data. However, please do
not insert anyone’s confidential information (for example, do not use anyone’s
personal SS# or DOB). Whether you use the given mock data, or create your own
mock data, it needs to be practical and the numbers must calculate correctly.
Section
Field
Mock Data
Mortgage
Type:
FHA
Purchase Price:
$225,000
Downpayment:
3.5% for FHA loan.
Loan Amount:
Interest Rate:
2.0%
Loan Term:
30 years
Address:
1961 Rams Road, Victorville CA
92395
Type:
Single family residence (SFR)
Legal Description:
Lot 5, Block 75, Sunshine
Neighborhood tract
Property
BRE-126 Borrower Mortgage Profile Data
Page 1
Borrower
Year Built:
1995
Purpose:
Owner Occupied Purchase
Title / vesting:
Community property with right of
survivorship
Estate:
Fee Simple
Downpayment funds:
Borrower’s bank accounts (savings)
Name:
Mickey Mouse
Social Security (SS#):
123-45-6789
Phone:
(123) 456-7890
Date of Birth (DOB):
January 2, 1985
Years of School:
Graduated from high school
Marital Status:
Married to Co-Borrower
Dependents:
Mighty Mouse, age 9
Address (physical):
123 Main Street, Apple Valley CA
98765
Own or Rent?
Rent
# of Years:
3 years
Address (mailing):
PO Box 123, Apple Valley CA 98765
Employer Name &
Address:
Tile Manufacturing Plant
Self-Employed?
No
Years on job:
1
Years employed in
this profession:
5
Position / Title /
Type of Business:
Office Manager
BRE-126 Borrower Mortgage Profile Data
Page 2
Co-Borrower
Business Phone:
(123) 654-9876
Self-Employed?
No
Dates:
From 1 year ago to 5 years ago
Monthly Income:
$4,570
Years on job:
4
Years employed in
this profession:
5
Position / Title /
Type of Business
Office Manager
Business Phone
(123) 654-7890
Previous Employer
Name & Address:
Southern California Logistics Airport
Previous
Employment:
$5,200 salary from job at Southern
California Logistics Airport
Other Income:
n/a
FICO Score:
685
Name
Minnie Mouse
Social Security (SS#):
987-65-4321
Phone:
(123) 456-7891
Date of Birth (DOB):
February 1, 1988
Years of School:
Graduated from high school
Marital Status
Married to Borrower
Dependents:
Mighty Mouse, age 9
Address (physical):
123 Main Street, Apple Valley CA
98765
Own or Rent?
Rent
BRE-126 Borrower Mortgage Profile Data
Page 3
# of Years
3 years
Address (mailing):
PO Box 123, Apple Valley CA 98765
Employer Name &
Address:
Chick-Fil-A Restaurant
Self-Employed?
No
Years on job:
4
Years employed in
this profession:
4
Position / Title /
Type of Business:
Shift Leader
Business Phone:
(123) 654-9875
Employer Name &
Address:
Minnie Mouse Loan Document
Signings
Self-Employed?
Yes
Dates:
Present – 2 years ago
Monthly Income:
$1,500
Years on job:
2
Years employed in
this profession:
2
Position / Title /
Type of Business
Notary Public
Business Phone
(123) 654-9987
Monthly Income:
$3,850 salary from job at Chick-Fil-A
Restaurant PLUS $1,500 monthly
income from self-employment at
“Minnie Mouse Loan Document
Signings”
BRE-126 Borrower Mortgage Profile Data
Page 4
Housing Expenses
(joint)
Assets (joint)
Other Income:
n/a
FICO Score:
701
Rent:
$2,150
First Mortgage
(Principal & Interest):
Hazard (Fire)
Insurance:
Real Estate Property
Taxes:
Mortgage Insurance
(FHA Loan):
HOA Dues:
none
Other:
n/a
Cash in all bank
accounts:
Bank Account #1:
First Savings Bank, 456 River Road,
Apple Valley CA 12345
Account # 789-123456
$5,500 in account
Bank Account #2:
Second Big Bank, 789 Bear Valley
Road, Victorville CA 23456
Account # 456-78932
$7,000 in account
Stocks & Bonds
None owned
Life Insurance net
cash value
Borrower $10,000
Real estate:
None owned
BRE-126 Borrower Mortgage Profile Data
Page 5
Retirement funds:
Borrower $15,000
Co-Borrower $5,000
Net worth of
businesses owned:
Co-Borrower $3,000
Automobiles owned:
2015 Chevy, value $15,000
2020 Toyota, value $20,000
Liabilities (joint)
Other assets:
none
Debt #1
Chevy Credit Union
Account # 123-45698
$250 monthly payment
$7,000 balance owed
Debt #2
Toyota Credit Union
Account # 132-65489
$350 monthly payment
$10,000 balance owed
Debt #3
Macy’s Credit Card
Account # 321-78965
$100 monthly payment
$2,000 balance owed
Transaction Details
Alimony/Child
Support
none
Job-related Expense:
none
Previous Names:
Minnie Mouse’s name prior to
marriage was “Minnie Winnie”
Closing costs:
3% of purchase price (includes
escrow, title, and loan fees)
BRE-126 Borrower Mortgage Profile Data
Page 6
Property taxes:
1% of purchase price
Fire insurance:
$600 per year
Upfront mortgage
insurance premium
(UFMIP) for FHA loan:
1.75% of loan amount
Mortgage insurance
premium (MIP) for
FHA loan:
$50 monthly fee
Private mortgage
insurance (PMI) for
conventional loans
none
HOA fees:
none
Credit from sellers or
other parties:
$3,000 credit from sellers
Declarations
Judgments,
bankruptcies,
foreclosures, lawsuits
none
Acknowledgement
Borrower
sign & date
Co-borrower
sign & date
Loan Amount:
Loan to Value (LTV):
Appraisal cost:
$350
Credit score fee:
$70 (total for both borrowers)
Loan fees:
Included in the “closing costs” above
BRE-126 Borrower Mortgage Profile Data
Page 7
Mortgage Loan