Residential & Commercial Financing - 5

Which of the following is an action borrowers take to temporarily lower the interest rate on their mortgage loan?

Buydown

Which party to the loan approval process is responsible for completing a loan application and supplying supporting documentation?

Buyer

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.

For 25 years, Isadora loved being her own boss, but now she's getting tired of the day in, day out tedium of running her business. She's ready to retire and move to a tropical island. She decides to sell her entire business in one fell swoop: the property together with all the equipment and furnishings. What type of loan would the buyer need to obtain?

Package

Which of the following is the credit score range?

300 and 850

What is a triggering term?

A word or phrase that, when used in advertising, requires the disclosure of all of the terms of a loan

Monica received a promotion at work that requires her to relocate. Because of the timing of her promotion, she'll need to buy a new house in her new city before her current one is sold. So, she won't have any equity from her current home to make a down payment on the new house. What loan option would allow her to make the purchase before selling the old house?

Bridge loan

Sam has a mortgage payment that includes his property taxes and property insurance. What type of mortgage does Sam have?

Budget

What information does the Loan Estimate provide to buyers under required disclosures law?

Loan payment schedule

What's the name of the clause included in a finance instrument that requires the lender to release a portion of the property from the lien when a part of the debt has been paid?

Partial release

Which of the following factors carries the heaviest weight when calculating a credit score?

Payment history

Amortized Loan

Periodic payments go toward both the principal and the interest

The ______ clause allows the borrower to pre-pay principal on the loan at any time without penalty.

Pre-payment

Fixed Rate

Principal and interest payments remain the same over the life of the loan

What does PITI stand for?

Principal, interest, taxes, insurance

Which clause in the deed of trust is the equivalent of the defeasance clause in the mortgage?

Reconveyance

A developer, Howard, has purchased land with the expectation of constructing an apartment building. He explains to his lender that he'll need a construction loan as well, so the mortgage they sign includes what kind of clause to allow the construction loan's lien position to take priority?

Subordination

Construction Mortgage

Temporary financing for construction purposes

Which of the following statements is true of investment properties?

They can be leveraged

Information about which of the following is included in the Uniform Residential Loan Application?

Uniform

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

Generally, what's the common range for loan origination fees?

1% to 3%

What is a convertible mortgage?

A mortgage that allows the borrower to change a mortgage from an adjustable rate to a fixed rate

Ava is borrowing money to buy some commercial property for her business. The loan agreement she signs includes a lock-in clause. What does that mean?

Ava will not be allowed to pre-pay the loan prior to the date specific in the loan agreement.

With a straight mortgage, what type of payments are made up until the end of the loan term?

Interest

Straight Mortgage

Interest only paid during life of loan. Full principal payment due at end of term.

What's one benefit of a rural development loan?

Its optional longer term means a lower monthly payment.

What may the lender require if the borrower is unable to put at least 20% down on a conventional loan?

Private Mortgage Insurance

What information about the property is included in the Uniform Residential Loan Application?

Property value

What factors directly affect an adjustable rate mortgage?

Rate, index, and margin

Which of the following is a significant drawback to an FHA loan as compared to conventional financing?

Required mortgage insurance must remain in place for the life of the loan.