Building Blocks Assignment

This assignment will help you build the foundational knowledge required to complete the Uniform Residential Loan Application in Assignment 2. By completing these tasks, you will gain familiarity with key sections of the loan application and important calculations in real estate financing. This assignment is designed to ensure you are well-prepared for the major assignment.

Important Reminder:

Before completing this assignment, review Assignment 2 thoroughly. The information and calculations you complete in this Building Blocks activity will be directly applied to Assignment 2, so make sure to save your work for later use.

Instructions:

Complete each section below. You will receive full credit for completing all parts of the assignment. This is a completion-based assignment designed to guide you step-by-step in preparation for Assignment 2.

Part 1: Loan Application Sections Breakdown

Instructions: Review each section of the Uniform Residential Loan Application (Form 1003) and write a short explanation (1-2 sentences) of what information is required for each section. This breakdown will guide you when you complete

Assignment 2.

Section I: Type of Mortgage and Terms of Loan
(Example: Enter the loan type, such as conventional or FHA, and the terms including the interest rate and loan amount.)
Section II: Property Information and Purpose of Loan
(Example: Provide the address of the property, the purpose of the loan, and the type of property being purchased.)
Section III: Borrower Information
(Example: Enter personal details about the borrower, including name, address, social security number, and dependents.)
Section IV: Employment Information
(Example: List the borrower’s employment history, salary, and length of time with their current employer.)
Section V: Monthly Income and Housing Expenses
(Example: Provide details of the borrower’s income, housing expenses, and other liabilities.)
Section VI: Assets and Liabilities
(Example: List the borrower’s assets, such as checking and savings accounts, and liabilities like credit card debt or loans.)
Section VII: Details of the Transaction
(Example: Enter information about the loan transaction, such as the purchase price and estimated closing costs.)
Section VIII: Declarations
(Example: Answer specific questions related to legal and financial obligations of the borrower.)
Section IX: Acknowledgment and Agreement
(Example: The borrower certifies the accuracy of the information provided and agrees to the terms.)
Section X: Information for Government Monitoring Purposes
(Example: Information collected for government tracking of demographic details, such as race and ethnicity.)

Part 2: Calculating Debt-to-Income (DTI) Ratio

Instructions: Using the provided fictional scenario below, calculate the Debt-to-Income (DTI) ratio. This calculation will help you when completing Assignment 2, so make sure you understand the process.

Use this formula:

Fictional Scenario:

Monthly Income: $5,000
Monthly Debt Payments:
- Credit Card Payment: $150
- Student Loan: $250
- Car Loan: $400
- Proposed Mortgage Payment: $1,500

Steps:

Add up the total monthly debt payments.
Divide the total by the gross monthly income.
Multiply by 100 to get the percentage.

Question:
What is the borrower’s Debt-to-Income ratio? Based on your reading, would this ratio likely qualify the borrower for a loan?

Part 3: Loan Qualification Factors

Instructions: List at least three key factors that lenders look at when deciding whether to approve or deny a loan. Write a brief explanation (1-2 sentences) of why each factor is important. These factors will be important in Assignment 2.

Example:

Credit Score: Lenders use credit scores to evaluate a borrower’s history of managing debt, which helps predict their ability to repay the loan.

Now you:
1.
2.
3.

Part 4: Final Check-In (Optional Bonus)

Instructions: In 2-3 sentences, explain which part of the Uniform Residential Loan Application you find most challenging or confusing and why. This is an opportunity to ask questions before starting Assignment 2!

Submission:

Submit your completed assignment through the assignment portal. Be sure to answer each section thoroughly. Feedback will be provided to help clarify any areas of difficulty.

Completion Criteria:

Loan Application Sections: Clear, concise descriptions are provided for each section.
DTI Calculation: Correct calculation and analysis of borrower qualification.
Loan Qualification Factors: Lists three key factors with brief explanations.
Bonus: Optional reflection on challenges or confusion (if applicable).

This Building Blocks assignment is designed to help you understand the essential elements of completing the loan application for Assignment 2. Complete it thoroughly and submit for full points, and be sure to reference your work when completing Assignment 2.

This assignment is designed to support your preparation for the major assignment, which is due next week and is worth 100 points. The Building Blocks assignment is worth 20 points and focuses on ensuring you have a strong foundation for success in your final submission.
Your submission should be clear, well-organized, and demonstrate that you are on track for completing the major assignment.
This assignment will be graded for completeness. You will earn the full 20 points by completing all the required tasks. If any required tasks are missing, the assignment will not earn any points.
Submit your work through Harmonize as a single document in a Word or PDF format.

Assignment 2

Your instruction manual or tutorial should be clear, well-organized, and easy to follow.
Use headings, subheadings, and bullet points to structure the content effectively.
Include relevant examples, definitions, and scenarios to enhance understanding.
Consider using visual aids, such as diagrams or flowcharts, to illustrate key concepts.
Include correctly formatted APA citations of your research. View the APA Style Citation Help for more information.
Your essay should be 1-2 pages, double-spaced, using 12-point font and standard 1-inch margins. Review the Assignment Guidelines for more information.

Completing the Uniform Residential Loan Application

Objective:

By the end of this assignment, you will complete the Uniform Residential Loan Application (Form 1003) as required for all conventional financing. This hands-on activity will help you understand how lenders evaluate borrowers and properties, preparing you for real-world scenarios in the real estate finance industry.

Instructions:

Download the Application:
Access the Uniform Residential Loan Application (Form 1003) and download it for completion.

Use the Fictional Scenario Below:
You will complete the form using the fictional borrower information provided here. Make sure to enter the data accurately and thoroughly into the corresponding sections of the loan application.

Fictional Scenario for Loan Application:

Borrower Information:

Name: John Doe
Social Security Number: 123-45-6789
Date of Birth: June 15, 1985
Address: 1234 Elm Street, Los Angeles, CA 90001
Phone: (310) 555-1234
Email: john.doe@example.com
Marital Status: Single
Dependents: 1 child (age 4)

Property Information:

Property Address: 5678 Oak Avenue, Los Angeles, CA 90001
Property Type: Single-family residence
Purchase Price: $600,000
Loan Amount: $540,000 (90% loan-to-value ratio)
Occupancy: Primary Residence
Purpose of Loan: Purchase

Loan Information:

Loan Type: Conventional 30-year fixed-rate mortgage
Interest Rate: 4.5%
Loan Term: 30 years
Proposed Monthly Mortgage Payment: $2,737.00 (principal and interest)

Employment Information:

Current Employer: Freelance Software Developer
Years with Employer: 2 years (self-employed)
Monthly Gross Income: $4,500
Employer Address: Self-employed
Employer Phone: Self-employed

Assets:

Checking Account (Bank of America): $5,000
Savings Account (Wells Fargo): $10,000
401(k) Retirement Account: $8,000

Liabilities:

Car Loan (ABC Credit Union): $18,000 balance, $400 monthly payment
Credit Card (Visa): $5,000 balance, $150 monthly payment
Student Loan (Federal): $25,000 balance, $250 monthly payment

Monthly Expenses:

Rent (current): $1,800
Utilities: $300
Insurance: $200
Child Support: $500
Other: $200

Filling Out the Application:

Complete each section of the application using the details from the scenario above. Ensure that all parts of the form are filled out accurately:

Section I: Enter the loan type and terms.
Section II: Use the property information provided.
Section III: Enter borrower details, including personal information.
Section IV: Complete the employment history section with the provided data.
Section V: Fill out the monthly income and housing expenses.
Section VI: List all assets and liabilities.
Sections VII-X: Fill out transaction details, declarations, and acknowledgment sections.

Loan Qualification Review:

After completing the application, write a brief analysis (200-300 words) on how lenders will use the following factors to determine loan approval:

- Creditworthiness (income stability, debt-to-income ratio, credit history).
- Property Qualification (loan-to-value ratio, property type).
- Debt-to-Income Ratio: Calculate the debt-to-income ratio using the provided information and explain how this ratio affects the borrower’s chances of approval.

Bonus Question (Extra 20 Points):

Do you think the borrower in this scenario will be approved for the loan? Why or why not? Use the information provided and your understanding of lender criteria (creditworthiness, income, debt-to-income ratio, loan-to-value ratio) to justify your answer. Write 150-200 words explaining your reasoning.

Submit the Application:

Upload the completed Uniform Residential Loan Application (Form 1003), your loan qualification review, and the bonus question response (if completed) to the assignment portal. Ensure every section is filled out completely and accurately.

Reflection (Optional Bonus – 5 points):

Write a short reflection (150-200 words) on your experience completing the loan application. Consider what aspects of the process might be challenging for first-time homebuyers and how this experience enhances your understanding of real estate finance.

Rubric (100 Points Total):

Criteria	Points	Description
Section I: Type of Loan	10	Accurately completes loan type and terms using the scenario provided.
Section II: Property Information	10	Provides correct property information based on the scenario.
Section III: Borrower Info	15	Completes borrower details with accurate use of the fictional scenario.
Section IV: Employment Info	15	Lists employment history, salary, and necessary details based on the provided scenario.
Section V: Income and Expenses	10	Accurately calculates monthly income and housing expenses using the given data.
Section VI: Assets & Liabilities	15	Lists all assets and liabilities clearly, reflecting the fictional scenario.
Sections VII-X	10	Completes transaction details, declarations, and acknowledgments accurately.
Loan Qualification Review	15	Provides a clear, concise analysis of loan approval factors based on the borrower’s situation.
Organization & Accuracy	10	Application is well-organized, complete, and free of errors, reflecting a professional submission.
Reflection (Bonus)	5	Thoughtful reflection on the process, discussing potential challenges for borrowers.

Total Points: 100

Bonus Question (20 points) Thoughtful analysis of whether the borrower will be approved, using lender criteria to justify the response. Be sure to include the words “include my extra credit” in order to get your extra credit.

By completing this assignment, you will gain practical experience with the loan application process, understand how lenders evaluate borrowers, and develop your skills in assessing loan qualification. Use the provided information carefully, ensuring you fill out the form accurately, and submit your final application along with the analysis for full credit

Answer Preview for Building Blocks Assignment

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