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. Credit History

2. Employment Income

3. Residential History

4. Spending Habits

The correct answer is: Credit History

The correct choice reflects an aspect that is not typically included in the assessment of a borrower's repayment ability. When lenders evaluate a borrower's capacity to repay a loan, they generally focus on quantifiable financial factors. Credit history is crucial because it provides insights into the borrower’s past borrowing behavior, payment patterns, and overall creditworthiness. Employment income is also a significant factor, as it demonstrates the borrower’s ability to generate income to meet loan obligations. Residential history can indicate stability and the likelihood of continuing to make payments, which can influence risk assessment. Spending habits, while they may indirectly affect repayment ability, are not as concrete or standardized as the other factors listed. Lenders tend to prioritize more definitive financial indicators and stability aspects rather than subjective interpretations of how a borrower spends their income. Therefore, this option is the best choice, as it does not constitute a formal assessment criterion in evaluating repayment capability.