Segment 11

What is the loan amount if the interest rate is 7.5% per year and the monthly interest payment is $1,250?

$200,000 First convert the amount of monthly interest to an annual interest amount ($1,250 × 12 = $15,000) Then divide that amount by the interest rate expressed as a decimal ($15,000 ÷ .075 = $200,000)

For a $240,000, 3/1 adjustable rate mortgage with a rate of 5.5%, what would the per diem interest be? Assume a 360 day year.

$36.66 The correct answer is $36.66. "per diem" means "per day," so you are looking for the daily interest incurred on the $240,000 loan amount. $240,000 x 0.055 = $13,200 ÷ 360 = $36.66

What is the standard qualification ratio for a conventional mortgage?

28/36 The general ratio is 28/36 for conventional mortgage programs (28% housing ratio, 36% debt ratio)

For applicants who have monthly pensions, the pension may be included in the income amount if the applicant can prove that he/she will receive it for at least __________ or longer.

3 years

Bob's GMI is $2,000 per month. He currently rents an apartment for $800 per month. Bob has a $199 monthly car lease and an $80 monthly credit card payment. What is Bob's qualifiying ratio?

40/54 Bob's housing ratio is $800 / $2000 = 40%. His debt ratio is ($800 + $199 + $80) / $2000 = 54%. Bob's housing/debt ratio is 40/54. Bob doesn't qualify for the most common mortgage loan products on his own and might need a co-borrower, a large down payment, or to locate a higher-debt lender who is willing to finance him.

Qualifying for a VA loan requires an applicant to have a __________ or less.

41 debt ratio VA is the only one that does not separate the two ratios, and requires a 41% maximum debt ratio.

A home is appraised at $100,000. The borrower currently has a loan of $50,000, an open-end line of credit with a limit of $25,000 and a current balance of $17,500. What is his LTV?

50% The correct answer is 50%. For the LTV, only the first loan amount is included. If there will be two loans on the property, the ratio calculation remains the same except that the loan amount will be the sum of the first and second mortgages. This ratio is called a combined loan-to-value ratio (CLTV). When secondary financing is a HELOC, the loan balance plus any draw amount is used to calculate the CLTV.

Rob is looking to purchase a property with a sale price of $200,000. He plans on making a $24,000 down payment on the purchase. What would be the loan-to-value for this transaction?

88% LTV $200,000 - $24,000 = $176,000 $176,000 / $200,000 = .88

What is the loan-to-value if the loan amount is $139,500, the appraised value is $164,117, and the sale price is $155,000?

90% The loan-to-value ratio is the loan amount divided by the lesser of the sales price or appraised value. In this instance, the sale price ($155,000) is less than the appraised price ($164,117). $139,500 (loan amount) ÷ $155,000 (sale price) = 0.90, or an LTV of 90%

The combined loan-to-value ratio can be found by

dividing the total of all loans by the property value. The combined loan-to-value ratio can be found by dividing the total of all loans by the property value. For example, if the property is worth $120,000, and the borrower got an 80% first loan and a $18,000 second loan, his loan-to-value ratio would be ($96,000 + $18,000 ) / $120,000 = 95%.

GMI

gross monthly income

Determining if an applicant meets income ratio qualifications requires a loan originator to calculate the applicant's:

housing ratio and debt ratio. (housing ratio = front end ~ debt ratio = back end)

Determining the type of loan an applicant can qualify for can be done by taking his/her gross monthly income and multiplying it by:

the maximum housing and debt ratios for the loan program.

Which of the following would be included as an expense in calculating the debt-to-income ratio? Assuming any debt has at least 10 months of payments remaining.

A personal loan The expenses included in the debt-to-income ratio include the minimum monthly payments for consumer loans, auto loans or leases, credit card debt, student loans, child or spousal support (alimony), and business expenses (if self-employed). Necessities, such as rent, utilities (phone, gas, water), insurance (auto, health), food and entertainment are not included.

Annual interest on a loan can be calculated by multiplying the loan amount by

Annual Percent Interest. Annual Interest = Loan Amount x Annual Percent Interest

CLTV

Combined Loan to Value

A homeowner has a home worth $220,000. He has an outstanding loan of $165,000, and a HELOC with a limit of $30,000, on which he has drawn $12,000. Which of the following is NOT true?

His TLTV is 94% The LTV is the closed-end loan divided by the value. The CLTV is the sum of the closed-end loan and the draw divided by the value. The TLTV (total loan-to-value ratio) is the sum of the HELOC limit and the closed-end loan ($195,000) divided by the value and has to be higher than the other ratios.

When secondary financing for a mortgage loan is a HELOC, the loan balance plus the total line limit is used to calculate the

TLTV When secondary financing is a HELOC, the loan balance plus any draw amount is used to calculate the TLTV. The loan balance plus the total line limit is used to calculate the TLTV.

When reviewing an applicant's W2 form, what would be the reason why for the amount in Box 3 (Social Security wages) to be less than the amount in Box 1 (Wages, tips, and compensation)?

The applicant earned more income than the Social Security tax could be collected on. This is because Social Security only taxes on the first $118,500 made per calendar year. Use the amount in box 1, as these are the actual earnings.

Private Mortgage Insurance costs for a $300,000 loan with a factor of 1.2% would be:

The correct answer is $300.00. A factor of 1.2 percent, expressed as a decimal would be 0.012. To calculate monthly costs, multiply the loan amount by the factor ($300,000.00 x 0.012) = $3,600.00 and divide it by the number of months in a year ($3,600 / 12) = $300.00.

Using a 36% back-end ratio, an applicant for an 80% conventional loan, with a gross monthly income of $3,600 and monthly fixed debts of $400 would be eligible for a loan with monthly payments to PITI of

The correct answer is $896. For an 80% loan, the borrower must generally not have fixed expenses in excess of 36% of income. 36% x $3,600 = $1,296. $1,296 - $400 = $896 available for PITI. The applicant could qualify for a loan with payments of $896.

What is a borrower's front-end ratio given the following variables? Gross monthly income: $5,300 Monthly principal and interest: $1,020 Annual property taxes: $3,278 Annual homeowners insurance: $650 Monthly auto payment: $295

The correct answer is 25%. The front-end (housing) ratio is calculated by dividing the costs of housing (PITI) by the borrower's gross monthly income. $3,278 + $650 = $3,928 annual taxes and insurance $3,928 ÷ 12 = $327.33 PITI = $1,020 + $327.33 = $1,347.33 per month $1,347.33 ÷ $5,300 = 0.2542 = 25.42%

The term combined loan-to-value is used when describing a loan that is:

a combination of more than one mortgage. The term "combined loan-to-value" (CLTV) is used to describe multiple mortgages that when combined, make up the financing of the mortgage loan. A common loan is a mortgage covering 80% of the property's sale price, and a separate loan for the 20% down payment. Combined, 80 + 20 is 100% financing.