Question

which of the following is likely to keep harry from being approved for a loan?
a. harrys debt-to-income is a stable 39%.
b. harrys credit score currently sits at 702.
c. harry has a gross monthly income of $3800.
d. harry was able to offer his vacation home as collateral for the loan.

please select the best answer from the choices provided

a
b
c
d

Explanation:

Analyze the lending criteria

Lenders evaluate several factors to determine loan approval, including credit score, income, collateral, and debt-to-income ratio. We must assess which option represents a negative factor under standard Lending Criteria.

Evaluate the debt-to-income ratio

Using the Debt-to-Income Ratio concept, a ratio of 39% is relatively high. Most traditional lenders prefer a debt-to-income ratio of 36% or lower, with no more than 28% dedicated to housing costs. A stable but high ratio of 39% makes it difficult to qualify for many standard loans.

Evaluate the remaining options

A credit score of 702 is considered "good" and supports approval. A gross monthly income of $3800 is a positive source of repayment. Offering a vacation home as collateral reduces lender risk, which aids approval. Thus, the high debt-to-income ratio is the only factor likely to prevent approval.

Answer:

• (A) Harry's debt-to-income is a stable 39%. (Correct answer)
• (B) Harry's credit score currently sits at 702.
• (C) Harry has a gross monthly income of $3800.
• (D) Harry was able to offer his vacation home as collateral for the loan.