Final answer:
A Lender should provide a Loan Estimate based on the borrower's current income, not potential future raises, to ensure responsible lending practices. A borrower's future wages are not guaranteed and therefore should not be factored into the loan estimate calculation.
Step-by-step explanation:
The question concerns whether a Lender should provide a Loan Estimate (LE) factoring in a client's anticipated raise. The standard practice for lenders is to base loan estimates on current, verifiable income, not on future expectations. This is because a raise is not guaranteed until it actually takes effect. A lender might consider the promise of a raise as a positive factor in the overall assessment of the borrower's financial situation, but the loan estimate itself must be grounded in the current income level to ensure accuracy and responsible lending.
That being said, there are ways for a borrower to reassure a bank faced with imperfect information about the borrower's ability to repay the loan. These methods can include providing a history of steady employment, demonstrating savings or a record of responsible financial behavior, offering collateral, or securing a co-signer. However, such measures primarily apply to the broader loan approval process, not specifically to the calculation of a loan estimate based on future income. It's essential for a lender to avoid making assumptions about a borrower's future financial situation because numerous variables can affect whether the raise actually materializes. Instead, the lender should prepare a loan estimate based on current, factual data, ensuring an ethical and practical approach to lending.