West Virginia Mortgage Law Practice Test

Which of the following is NOT one of the factors upon which an assessment of borrower repayment ability must be based?

1. Assets

2. Debt-to-income ratio

3. Employment status

4. Payments on simultaneous loans

The correct answer is: Assets

The correct answer highlights that assets are not typically a primary factor in assessing a borrower’s repayment ability. While having assets may provide a sense of financial stability, lenders primarily focus on ongoing income and how much of that income is allocated to servicing debt. The debt-to-income ratio is crucial because it measures the borrower’s total monthly debt payments against gross monthly income, helping lenders gauge whether a borrower can manage new debt responsibly. Employment status is also vital, as stable and ongoing employment generally indicates a reliable income source, enhancing confidence in the borrower’s ability to repay. Additionally, payments on simultaneous loans play a role in understanding overall monthly obligations, which impacts the borrower’s capacity to handle additional debt. In summary, while assets are important for overall financial assessment, they do not directly reflect the borrower’s ability to generate income and manage monthly payments, which is why they are not considered a core factor in this specific assessment context.