financing

Chris is in the process of purchasing a property with 20 acres of farmland in a rural area of the state. Assuming his income meets the criteria of the program, what type of loan may Chris find the most desirable?

rural development loan

Real estate professionals handle many documents related to real estate transactions. Which one of the items listed below is one of the most important in detecting mortgage fraud?

original sales agreement and any addenda

What does PITI stand for?

principal, interest, tax, insurance

a conventional loan is backed by

private lenders.. not the government

PMI example: Celia was obtaining a conventional loan, and she put $50,000 down as a down payment. Why might her lender also require her to obtain private mortgage insurance?

Her down payment of $50,000 isn't at least 20% of the purchase price.

What type of loan is neither guaranteed nor insured by government agencies?

conventional

Under TILA, ads that mention general financing terms, such as "low down payment" or "easy financing," do not require additional disclosure. If Bo had gotten more specific (e.g., "10-year loan with 0% down") he would need to include more information.

there are trigger terms that require more information, but simple & general explanations terms do not require additional disclosure.

What's the purpose of the fixed/adjustable rate note?

to convert interest rate from fixed to adjustable

a point is ___ % of loan

1% .01 x loan amount

what does an LTV of 80% mean?

80% financed. 20% put down.

Balloon Payment Loan

A final payment of a mortgage loan that is considerably larger than the required periodic payments because the loan amount was not fully amortized.

silent second

A silent second mortgage is a second mortgage placed on an asset (such as a home) for down payment funds that are not disclosed to the original lender on the first mortgage. The second mortgage is called "silent" because the borrower does not disclose its existence to the original mortgage lender.Jun 19, 2020

wrap around loan

A wrap-around loan takes into account the remaining balance on the seller's existing mortgage at its contracted mortgage rate and adds an incremental balance to arrive at the total purchase price. In a wrap-around loan, the seller's base rate of interest is based on the terms of the existing mortgage loan.

under TILA, specific financing terms require these disclosures

Lenders must provide a Truth in Lending (TIL) disclosure statement that includes information about the amount of your loan, the annual percentage rate (APR), finance charges (including application fees, late charges, prepayment penalties), a payment schedule and the total repayment amount over the lifetime of the loan.Sep 26, 2012

Loan-to-Value Ratio (LTV)

Loan Amount ÷ Sales Price or Appraised Value (Whichever is less)

discount points

Mortgage points, also known as discount points, are fees paid directly to the lender at closing in exchange for a reduced interest rate. This is also called "buying down the rate," which can lower your monthly mortgage payments.

straw buyer

Someone who purchases property for another so as to conceal the identity of the real purchaser; a dummy purchaser; a nominee; a front.

usury

When a loan's interest rate is higher than the maximum allowable rate

How does the lender determine whether the property is worth the sales price?

appraisal

In a residential real estate sale involving a federally related loan, what entity is required to provide Real Estate Settlement Procedures Act disclosures to the consumer?

consumer's lender

gap financing

debt arranged to fill the borrower's temporary shortfall between a short term and long term loan

Ted is in foreclosure but has some equity in his property. An investor suggests that Ted enter into a sales contract with him for a substantially higher price than the investor would actually be paying. The investor pockets the cash and allow the house to be foreclosed on. What sort of scheme is this?

equity skimming

As interest rates fall, the number of buyers in the market is likely to ______.

increase. BUYERS MARKET

one benefit of rural development loans

longer payback period which means lower monthly payments

What attracts borrowers to adjustable rate mortgages?

lower initial interest rate

range for loan origination fees

1% to 3%

va loan

A loan from Veterans Affairs; insures loans to people who have served in the military, with no down payment required

prepayment penalty

A monetary penalty imposed on a borrower for paying off a loan before its intended time

FHA loan

An FHA Loan is a mortgage that's insured by the Federal Housing Administration. They allow borrowers to finance homes with down payments as low as 3.5%

inflated appraisal

An appraiser intentionally submits a misleading report to a lender that indicates an inflated property value.

Equity Skimming

Investor uses a straw buyer and false documents to obtain a loan. The straw buyer signs the property over to the investor who rents the property, but makes no payments on the loan and eventually loses it in foreclosure.

when might a lender require you to obtain PMI?

PMI is usually required when you have a conventional loan and make a down payment of LESS THAN 20 percent of the home's purchase price. If you're refinancing with a conventional loan and your equity is less than 20 percent of the value of your home, PMI is also usually required

A mortgage is a legally binding document that creates a lien on a piece of property and gives the lender the right to foreclose on the property if the borrower defaults. Who or what entity is considered the mortgagee?

The lender holds the mortgage on the property, so the lender is the mortgagee.

what does a balloon payment represent at the end of a loan term

It means that some principal remains at the end of the loan term.

until buyer pays all monthly installments off to the seller, who retains the title?

the seller