Financing Residential Real Estate
The Richardson stable monthly income is $6000 they're recurring liabilities come to $700 per month. If they want to qualify for a 90% conventional loan, there perposed monthly housing expense PITI probably should not exceed
$1460
The posts are buying a house for $254000. Its appraised value is $255000 the estimated closing costs come to $8900 their mortgage loan has a 90% LTV which means that the posts are Borrowing
$228600
The seller is paying for it level payment temporary by down that will reduce the buyer's interests rate by 2% for 3 years, lowering the monthly payment from $1000 to $875 during that period period this by down will cost the seller approximately
$4500
As a general rule, on underwriter won't count income from self employment as stable monthly income unless the loan applicant has operated her business profitably for at least
2 years
As a general rule on FHA borrowers dept. To income ratio should not exceed
43%
Aside from bankruptcy's negative credit information ordinarily remains on an individual's credit report for
7 years
Alex Carville is a playing for conventional financing to buy a home. The seller has agreed to pay for a perminent by down that would lower the interest rate from 10% to 8%.What rate will the lender used to qualify Carville for the lone?
8%
Private mortgage insurance is generally not required on conventional loans unless the loan to value ratio is over
80%
Compared to a 30 year loan, a 15 year loan usually has
A lower interest rate and a larger monthly payment
A due on sale clause is the same thing as
And alienation clause
The federal government created the secondary mortgage market
Because the secondary market helps to moderate the disruptive economic affects of local real estate cycles
In a deed of trust, the lender is referred to as the
Beneficiary
Fannie Mae and Freddie Mac are willing to buy
Both a &c
Long term mortgage loans were introduced
In response to the foreclosure epidemic that occurred during the depression
Vidia North just made her monthly mortgage payment which includes a share of her property taxes and her hazard insurance premium. What will the lender do with the tax and insurance portions of the payment?
Keep them in an impound account until payment is due
In most transactions financed with a land contract the vendor enters
Legal title until the full contract price has been paid
A subordination clause is most likely to be included in a
Loan for the purchase of vacant land when construction is planned
Affordable housing programs involving conventional loans often have
Maximum income limits
As a general rule secondary financing in conjunction with a conventional loan
Must comply with restrictions imposed by the primary lender
All of the following could hurt an individual's credit score except
Requesting corrections to their credit score
An FHA borrower is
Required to make a minimum cash investment which does not include closing costs discount points or prepaid expenses
If a lender requires a borrower to have enough money left over after closing to cover a certain number of mortgage payments those funds are called
Reserves
Charging mortgage borrowers higher or lower interest rates depending on whether they are good credit risks or poor credit risks is called
Risk based pricing
The term piggyback loan refers to
Secondary financing
The Lawrence's bought a home with Ava loan in 1993, and the guarantee amount was $46000. Now they're selling the property to a non veteran who plans to assume the loan. Which of the following is true?
The Lawrence's have some remaining entitlement, but their full entitlement can not be restored until they're old loan has been paid off
In connection with most mortgage loan applications common lenders must provide a good faith estimate of
The borrower's closing costs
If the seller didn't pay off the mortgage and the buyer didn't assume it
The buyer took title subject to the mortgage and the lender can still foreclose on the property
For VA loans, most lenders require
The guarantee amount plus any downpayment to equal or exceed 25% of the purchase price
The Zinn's are applying for a loan to buy a new home while their old one is still for sale. When adding up the Zinn's liquid assets the underwriter will include
Their net equity in the old home
Which of the following is true of Fannie Mae, Freddie Mac, and Ginnie Mae?
They all issue and/or guaranty mortgage-backed securities that are sold to investors
Which of the following could serve as a definition of negative amortization
When unpaid interest is added to the principal balance increasing the amount owed
The truth in lending act (Regulation Z) requires a residential leader to give a loan applicant a disclosure statement regarding finance charges.
Within 3 business days after receiving the written application
George Wilson is applying for a 90% conventional loan. His parents are willing to give him some money to help him by the house. Can gift funds be applied to the required down payment for this loan?
Yes although Wilson may be required to pay certain amount of the sales price out of his own resources
For an investor 3 key characteristics of a potential investment our safety liquidity and
Yield
A loan that has a fixed interest rate for the 1st 5 years and and annually adjustable rate for the remainder of the long term is called a:
hybrid ARM
The jacksons are buying a home for $320000 theyll be required to pay discount fee of 3 points for their $300000 loan the fee will amount to
$9000
A key characteristic of a gem is that
100% of the annual payment increases are used to reduce the principal balance
In qualifying a buyer for a conventional loan an underwriter would probably take into account all of the following liabilities except
A car loan with 4 $200 monthly payments remaining
Which of the following should a loan applicant take to the initial loan interview
A copy of the purchase and sales agreement if the applicant has already entered into one
In certain cases if proceeds of a sheriff's sale aren't sufficient to pay off the 4 closed mortgage the lender may Sue the borrower for the remainder owed if the court rules in the lenders favor it will Grant the lender
A deficiency judgment
Which of the following would an appraiser be most likely to Use as a comparison sell for a sales comparison appraisal with any necessary adjustments?
A home quite similar to the subject property, located in a similar neighborhood nearby, which sold 3 months ago
A loan that doesn't comply with Fannie Mae, or Freddie Mac's underwriting guidelines Is called
A non conforming loan
An underwriter would be concerned with residual income when evaluating an application for
A va guaranteed loan
The relationship between the total finance charge and the total amount financed is expressed in a loans
APR
Which of the following provisions in a mortgage allows the lender to demand immediate payment of the entire outstanding loan balance if the borrower defaults?
Acceleration Clause
The statutory right of redemption allows a defaulting borrower to redeem the property
After the sheriff's sale in a judicial foreclosure
Buyers with little money available for closing would be most likely to consider
An FHA loan
The line hands are buying a single family home with an FHA loan. The FHA insurance will require
An up front premium that may be paid in cash or financed plus an annual premium
The Duncan's bought their new home a few years ago but they conventional loan. Now they are selling the property to a buyer who wants to assume the loan. The lender could
Any of the above
In conventional financing the traditional 28% and 36% income ratios
Are treated as guidelines not strict Limits
When calculating a loan applicant stable monthly income on underwriter may gross up certain types of income that
Aren't taxable
Which government sponsored enterprise was placed in to Conservatorship in 2008
Both a and B
All of the following are considered predatory lending practices, except.
Charging a prepayment penalty
The basic purpose of an origination fee is 2
Cover the lenders overhead and costs incurred in making a loan
Which of these does Fannie Mae considered to be one of the 2 primary risk factors that determine the level of review that should be applied to the rest of the loan application?
Credit score
In contrast to wholesale lenders retail lenders
Deal directly with loan applicants
In analyzing a loan applicants income to determine if he or she can afford of the proposed loan, lenders are usually most concerned with the applicants
Debt to income ratio
Under the equal credit opportunity act, lenders are not allowed to
Discriminate based on age or marital status
One characteristic that distinguishes securities from other types of investments is that securities
Don't give the investor direct managerial control over the enterprise invested in
A borrower obtains an FHA insured loan through the 203B program. She may use the loan to purchase a
Duplex where she will occupy one of the units
Reverse mortgages
Enable some elderly homeowners to keep Their homes
PITI might include all of the following except
Escrow fees
A promissory note
Establishes the borrowers legal obligation to repay the loan
A jumbo loan is a loan that
Exceeds the conforming loan limits set by Fannie Mae and Freddie Mac
Temporary by Downs and hybrid ARM's might be of particular interest to home buyers who
Expect their income to increase substantially in the next few years
Which of the following is a secondary market entity?
FNMA
Use of gift funds in a transaction requires a
Gift letter from the donor
A lender making a conventional loan would not necessarily comply with the underwriting guidelines of the major secondary market entities
If the lender intended to keep the loan in portfolio
Ben Chan is applying for a mortgage loan. His interest rate will be 6.15% if the transaction closes within 60 days. Chan's interest rate has been
Locked in
In a typical residential real estate transaction if closing takes place on January 20 the due date for the buyers 1st mortgage payment will be
March one
With an adjustable rate mortgage the loans interest rate
May increase or decrease during the loan term
Which of TheseStatements about predatory lending is true
Most predatory lending takes place in the sub prime market
Under the community reinvestment act, depository institutions
Must report the number of mortgage loans issued to low and middle income borrowers
Margo Smith and John pro men just bought a home with an FHA loan. Whether they sell the home, who could assume their loan?
Only a buyer who meets the FHA's credit worthiness standards and will occupy the home as his or her primary residence
Ordinarilie interim or prepaid interest is
Paid to the lender by the buyer at closing
The loan has a fixed interest rate and level monthly payments a portion of each month's payment is applied to interest and of the remainder is applied to principal but a balloon payment will be due at the end of the term this loan is
Partially amortized
For federally related loans, a key provision of the real estate settlement procedures act
Prevents lenders from paying referral fees to real estate agents for referring customers
A bridge loan, also called a swing or gap lone, is used to
Provide funds to close the purchase of a new home before the buyers old home has been sold
Buyer a and buyer B are both buying single family Homes. Buyer a is borrowing $300000 Buyer B is borrowing $900000. It is very likely that Buyer B will be
Qualified with more stringent standards then Buyer A
The federal law that requires closing agents to use the uniform settlement statement form is
RESPA
The most common alternative private source of lending to buyers is
Sellers
Jerry feral is buying a single family home she can finance the purchase with an FHA loan only if
She intends to occupy the property as her principal residence
Which of the following is most likely to be treated as a compensating factors so that the loan applicant will be allowed to have income ratios that exceed the usual maximum?
She's buying an energy efficient home
When the hendersons loan application was submitted to an automated underwriting system, the system did not give there alone a risk classification of Approve or Acept In this situation
The lender may have the application under written manually to see if it should be approved any way
Which of these does not change during the term of an adjustable rate mortgage
The lenders margin
A married couple is applying for a conventional mortgage loan. The husband's FICO credit score is 740 and the wife's his 680. The underwriter will qualify them using
The lower of the 2 scores
When a borrower exercises the conversion option in an ARM the new fixed interest rate is usually
The market rate at the time of conversion
Kevin Novak is buying a home. To help him qualify for financing, his parents are going to cosign the loan. Which of the following is true a?
The parents can be required to pay the entire remaining loan balance in case of default
Acme savings just pre approved the Swanson's for a mortgage loan. Which of the following steps remained to be done before closing?
The property still must be appraised and a title report obtained if the Swanson's find a home
With wrap-around financing
The seller continues to make the payments on the underlying loan
In a lease option arrangement
The tenant/optionee is under no obligation to buy the property
Secondary financing from someone other than a family member is permitted in conjunction with an FHA loan if
The to loans combined do not exceed the maximum loan to value ratio for the transaction
The power of sale clause in a deed of trust permits
The trusty to for close non judicially
What bill, passed in 2008, authorized the Treasury department to purchase stock in and assets of failing financial institutions?
Troubled assets relief program
Which of the following statements regarding private mortgage insurance is true?
Under certain conditions, the lender is required to cancel the PMI whether or not the borrower request cancelation
A form of income that lenders do not normally count as stable income is
Unemployment compensation
Which of these types of income is least likely to be counted as part of a loan applicants stable monthly income?
Unemployment compensation
When the Diaz's bought their home they didn't make a down payment but they did pay funding fee. They must have financed the purchase with a/an
VA loan
An advertisement that offers home purchase loans with only 1% down
Violates the truth in lending act unless had also States the APR and other repayment terms
Seller financing is most likely to be used
When market interest rates are high