Texas Real Estate Finance 2

What is the formula for calculating the total housing ratio?

(Monthly housing expenses ÷ gross monthly income) × 100

The median credit score for most consumers is _______.

670-739

Which of the following best describes annual percentage rate (APR)?

A standardized measure for interest rates and other loan costs

A VA loan program that allows a veteran to refinance at a lower rate and receive cash proceeds to fund other investments or purchases is ______.

Cash Out Refinance

Which of the following would the FDIC most likely insure?

Certificates of deposit

What's the primary source of funds for commercial banks?

Demand deposits

When a real estate transaction is financed using a contract for deed, what advice should real estate agents give to their clients?

Have an attorney review the contract.

In a mortgage, the property is used as collateral for the loan. What's the term for the process of pledging something as collateral?

Hypothecation Using a property as collateral for a mortgage is known as hypothecation. If it helps, think "Hypothetically, if I didn't pay my mortgage, you could take my house."

Jerry is appraising a five-bedroom home in the suburbs. After identifying the purpose of the appraisal, what does he need to do next?

Identify the data that is needed.

Which of these would most likely be found in the "potentially negative items" section of a credit report?

Lien

How do mortgage lenders acquire income?

Loan interest and mortgage packages sold on the secondary market

______ taxation means that the business income passes through to the business owner's individual tax return rather than being taxed as a separate entity.

Pass-through

The section on the Loan Estimate called "Services You Cannot Shop For" includes fees for services ______.

Performed by a third party that the lender selects

Which clause is standard in a deed of trust and affects the foreclosure process that can be used if the borrower defaults?

Power of sale

The two most common methods used when a bank fails are the payout method and the ______ method.

Purchase and assumption Most commonly, the purchase and assumption and payout methods are used when a bank becomes insolvent.

Violet purchased a house from Nick, and assumed the existing loan. Nick wants to make sure he isn't liable if Violet ever defaults. What can he do to remove his name from the loan agreement?

Request a novation The novation is a process that substitutes one person for another on a contract.

How do falling interest rates impact investors in mortgage-backed securities?

Returns on investments decrease. Investors may be negatively impacted by falling interest rates. Lower rates mean smaller interest payments that eventually pass through to investors.

Zack and April are purchasing a home. They apply to three different lenders and review the Loan Estimates they receive. Each form includes a field identifying the National Mortgage Licensing System ID number for the lender. What is the act that requires this licensing identification to be available to consumers?

SAFE Act The Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) requires that mortgage loan originators obtain a license that consumers can identify and research.

Larry obtained a mortgage from State Bank. Larry owns the property, controls it, and has all the rights that come along with real property ownership. State Bank has an interest in the property and one other right. What is that?

The right to foreclose if the borrower defaults The lender has a lien on the property and the right to foreclose if the borrower were to default.

When does the need for mortgage insurance end for a borrower who has a VA loan?

There is no mortgage insurance requirement for a VA loan. One big benefit of a VA loan is that it doesn't require mortgage insurance even though the borrower is placing less than 20% down (in most cases borrowers make no down payment).

Which veteran loan program offers qualified veterans help with the purchase of land in Texas?

Veterans Land Program The VLP helps qualifying veterans purchase at least one acre of land in Texas. Remember that the "L" in VLP represents "land."

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

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

A Treasury bill is a Treasury security ______.

With a maturity term of one year or less