Sample interview questions: How do you assess the impact of interest rate fluctuations on a borrower’s creditworthiness?
Sample answer:
Assess the impact of interest rate fluctuations on a borrower’s creditworthiness:
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Evaluate income stability: Determine the borrower’s ability to generate stable income that can withstand potential interest rate increases. Consider factors such as employment stability, industry trends, and income growth potential.
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Analyze debt-to-income ratio: Assess the borrower’s existing debt obligations and how interest rate changes will affect their debt-to-income (DTI) ratio. Higher DTI ratios increase the risk of default if interest rates rise.
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Calculate interest rate sensitivity: Estimate the impact of different interest rate scenarios on the borrower’s monthly payments and overall borrowing costs. Determine if the borrower has sufficient cash flow to cover these increased expenses.
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Review collateral and loan-to-value ratio: For se… Read full answer