Mortgage Suitability


DEFINITION of 'Mortgage Suitability'

A standard to which mortgage lenders can adhere when directing consumers to a mortgage loan. Under such a standard, mortgage lenders would be held liable for steering consumers toward an unsuitable mortgage. While no federal suitability standard currently exists, lenders are vehemently opposed to such a standard because they argue that they cannot possibly collect and know all of the information required to make a decision for a consumer.

BREAKING DOWN 'Mortgage Suitability'

Mortgage financial literacy is an alternative solution to setting suitability standards. The choice of a mortgage is a standard risk versus reward scenario, which is prevalent in most financial decisions. Informed and educated consumers can make effective mortgage decisions in the context of risk versus reward.

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  1. Do FHA loans have prepayment penalties?

    Unlike subprime mortgages issued by some conventional commercial lenders, Federal Housing Administration (FHA) loans do not ... Read Full Answer >>
  2. Can FHA loans be refinanced?

    Federal Housing Administration (FHA) loans can be refinanced in several ways. According to the U.S. Department of Housing ... Read Full Answer >>
  3. Can FHA loans be used for investment property?

    Federal Housing Administration (FHA) loans were created to promote homeownership. These loans have lower down payment requirements ... Read Full Answer >>
  4. Do FHA loans have private mortgage insurance (PMI)?

    he When you make a down payment from 3 to 20% of the value of your home and take out a Federal Housing Administration (FHA) ... Read Full Answer >>
  5. How many FHA loans can I have?

    Generally, the Federal Housing Administration (FHA) does not insure more than one mortgage per borrower. This is to prevent ... Read Full Answer >>
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    Loans insured by the Federal Housing Administration (FHA) on or after Dec. 15, 1989, are assumable by qualifying borrowers. ... Read Full Answer >>

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