2nd half: section 9 Loan Qualification & Financing in. WA

¡Supera tus tareas y exámenes ahora con Quizwiz!

An appraised value that's lower or higher than expected creates some dilemmas for the buyer and seller. Which two of these statements about appraised values are correct?

- A low appraised value may mean that the seller has to reduce the sales price or that the buyer has to come up with additional cash. - An appraised value that's considerably higher than the purchase price may leave the seller feeling cheated.

Loans available on the primary market are either conventional or government loans. Select the two statements that describe a conventional loan.

- Generally are packaged and sold on the secondary mortgage market - Available in different loan products

There are several criteria that lenders use to determine whether a loan conforms to Fannie Mae/Freddie Mac guidelines. Identify these criteria.

- Housing or total debt-to-income ratio - Loan amount - Loan-to-value ratio - Down payment

Francis did his homework, decided on a loan, and filled out and submitted his loan application. Now, he's having second thoughts. How long does his right to rescind last? Select the two best answers.

- Three business days from the transaction being consummated - Three business days from delivery of the disclosure statement

Several Washington cities and counties offer down payment assistance (DPA) for buyers of properties within those localities. Which of these municipalities have DPA programs available?

-Tacoma -Seattle -Bellingham

Which of the following is the credit score range?

300 and 850

Jeffrey has accepted an offer of $310,000 for his house. The buyer is making a $50,000 down payment, and the buyer's appraisal came in at $300,000. On what number will the buyer's lender base the loan-to-value ratio?

300,000

Which range of credit scores represents the average score for Americans overall?

670 to 739

Consumers in the _______ range have an above-average credit score. They tend to qualify for better interest rates than those in the "acceptable" category.

740-799

Consumers in the _______ range are well above the average credit score and generally have an easy time getting approved for new credit.

800+

Pre-qualification letter

A letter from a lender stating that, on the face of information provided by the borrower, the borrower will likely qualify for the loan

What's a payment cap?

A limit to how much monthly payments can increase during any given year

Conforming loan

A loan that adheres to Fannie Mae and Freddie Mac criteria and may be sold on the secondary mortgage market

Which professional performs appraisals?

Certified appraiser

Juan's credit score is being pulled. Which of these actions would have a positive effect on his score?

Credit accounts with low or no balances

Lender criteria

Credit history, monthly housing expense vs. income ratio, total payment obligations vs. income ratio

Which type of loan is insured by the Federal Housing Administration?

Government

Buyers don't want to be committed to purchasing a home for more than it's worth. What's the best way for buyers to protect themselves in the event the property appraises for lower than the contracted sales price?

Include an appraisal contingency with the purchase contract.

Whenever property is being financed, an appraisal will be required. Which party to the transaction is responsible for ordering the appraisal?

Lender

Payment history, age of accounts, credit usage rate, and inquiries are factors considered in calculating a credit score. Which of the following is also considered?

Length of credit history

Borrowers must list their liabilities when completing a residential loan application. What are liabilities?

Obligations a borrower owes

HomeChoice

Offers down payment assistance to buyers who have a disability

Your seller clients are angry because the buyer's financing fell through. "The buyer was pre-qualified! How can this happen?" they ask. How do you answer?

Pre-qualification does not equal pre-approval.

House Key Opportunity

Program for first-time buyers offers financing at below-market rates

Home Advantage

Program with below-market rates and financing up to 97% of appraised value

The Hendersons don't have enough money to make the full 20% down payment their institutional lender requires. To close the sale, the seller is willing to finance a loan for the amount between the home's list price and what the institutional lender is willing to loan. What's this type of financing called?

Purchase money mortgage

In order for earnings from a second or part-time job to be considered as part of a lender's income evaluation, what must be true?

The applicant must have been employed for at least two years, and the employment must be expected to continue.

Which statement most accurately describes the right of rescission?

The three-business-day period from the date a transaction is consummated or disclosures are delivered to the borrower, whichever is later, during which the borrower can cancel the loan

Tina is applying for a home loan. In order for child support payments she receives to be considered in the income evaluation by her lender, what must be true?

There must be a consistent track record of payment or the payments must be the result of a court order.

(monthly debt payments / gross monthly income) x 100

Total debt ratio

Guarantees loans

VA loan

When is private mortgage insurance typically required on a conventional loan?

When the borrower's down payment is less than 20%.

Payment history, credit usage, inquiries, and types of accounts are factors considered in calculating a credit score. Which of the following options is also a factor?

age of accounts

Conforming loan

is one that conforms to Fannie Mae and Freddie Mac guidelines. A jumbo loan is non-conforming because the loan amount is over the Fannie Mae/Freddie Mac loan limit, but a jumbo loan can still be a conventional loan, and the FHA does actually insure jumbo loans for qualified borrowers.

The buyer makes payments to the seller.

land contract

The buyer places security interest in property on behalf of the seller.

purchase money

The buyer retains title.

purchase money

Your buyer client asks you the purpose of a financing contingency. Your response should be that it protects _________________.

the buyer

Which statement describes a conforming loan?

A loan that meets certain criteria that are accepted by Fannie Mae and Freddie Mac

VA loan

A mortgage loan guaranteed by the U.S. Department of Veterans Affairs

Adjustable rate mortgage (ARM)

A mortgage loan in which the interest rate varies according to a recognized index, such as the Consumer Price Index

FHA loan

A mortgage loan insured by the Federal Housing Administration

Pre-approval letter

An assurance from the lender that the borrower appears to have the funds and creditworthiness to close; includes verifying the borrower's credit standing, available funds and employment history

When a borrower is completing a loan application, items of value the borrower owns are listed in the ______ section.

Assets

MIP always required

FHA Loan

Insures loans

FHA loan

Typical down payments are 3.5%

FHA loan

Why are new condominiums an issue with FHA loans?

FHA requires 50% of the units to be under contract

Buyers may borrow up to 97% of the appraised value or sales price, whichever is lower.

Home Advantage

Simon has been living in Portland, Oregon, for the last two years. Prior to that, he was living and working in Vancouver, Washington. He owned a condo in Vancouver, but sold it when he moved to Portland, and rented the entire time he was in Oregon. He moved to Seattle for a new job, and he'd really like some mortgage assistance, since his job is only slightly above entry level. Which program would likely work for Simon?

Home Advantage

Tanya and Gino sold their condo six months ago, and want to buy a larger, single-family home. They're concerned because they only have a 5% down payment. Which Washington buyer assistance program might be right for them?

Home Advantage

The property must meet Federal Housing Administration (FHA) guidelines.

Home Advantage

This program offers below-market rates and financing for up to 97% of appraised value.

Home Advantage

This program offers down payment assistance to buyers with a disability.

HomeChoice

Borrowers must be first-time buyers.

House Key

The program is funded by the sale of tax-exempt bonds.

House Key

The property can't be more than a maximum sales price.

House Key

This program for first-time buyers offers financing below-market rates.

House Key opportunity

Lenders use credit scores when determining whether to approve a loan application. What does the score tell the lender?

How likely the applicant is to repay the money that's been borrowed

Adjustable rate mortgage interest rates are often linked with a recognized ______.

Index

Payment history, age of accounts, credit usage, and types of accounts are factors considered in calculating a credit score. What's also a factor?

Inquiries

Brian is completing a residential loan application. On the application, he lists his assets. What are assets?

Items of value the borrower owns

The seller retains title.

Land contract

Housing debt ratio

Monthly housing payment (principal, interest, taxes, and insurance)/monthly gross income

Which of the following responses to a low property appraisal might impact the buyer's equity in the home?

The buyer makes up the difference between the appraised value and the purchase price.

Besides the appraisal, what's a common hurdle as transactions approach closing?

The buyer's financing falls through.

Loan-to-value ratio (LTVR)

The ratio of a loan to the value of the property purchased (to a lender, value is the lower of the sales price or appraised value)

Which statement is true regarding most government loans?

They're insured or guaranteed by the government.

What is the purpose of TILA (truth in lending act) ?

To better educate consumers about the cost of credit and financing

What's the purpose of the financing contingency?

To protect the buyer in case the buyer cannot obtain financing

(monthly housing expenses / gross monthly income) x 100

Total housing ratio

Total debt ratio

Total liabilities/total debt

Brent is your buyer client and a first-time homebuyer. Despite every effort he's made to win the lottery, he'll be financing the purchase of his first home. You're about to review the financing steps with him. Which is the first financing step he must complete? a. Sign a purchase contract b. Complete a loan application c. Obtain pre-qualification or pre-approval letter

c. Obtain pre-qualification or pre-approval letter

Biff is completing a residential loan application. Which of the following would he include in the liabilities section?

car loan

Federal agencies don't participate in insuring or guaranteeing the loan

conventional loan

Payment history, age of accounts, inquiries, and types of accounts are factors considered in calculating a credit score. What's another item that's considered?

credit usage

A conventional loan

is one that doesn't require special financing, such as an FHA or VA loan (which are types of government loans). These are also often called commercial loans (but this doesn't mean that it's for a commercial product).

Which is the most important factor used to determine a credit score?

payment history


Conjuntos de estudio relacionados

Chapter 5: Understanding Metrics

View Set

Chapter 16 Therapeutic Relationships intro to OT

View Set

Insurance Property and Casualty test ver

View Set

Chapter 15 & 16 Physical, Cognitive, Developmental, and Emotion Psych of Middle Adulthood

View Set

Chapter 3: Classification and Diagnosis

View Set

Dilemmas of Democracy, The Constitution and Federalism [chapt. 1-3]

View Set