Unit 14

Divide the mortgage amount by 12 and add this additional amount to the monthly payment. Snowball 1/12 plan Set dollar over Bi-weekly plan Lump sum plan

1/12 plan

What is the best-case scenario with a debt-to-income ratio? 100% debt-to-income 20% debt-to-income 60% debt-to-income 80% debt-to-income

20% debt-to-income

Qualified mortgages require debt-to-income ratios of no more than ______. 28% 35% 38% 43%

43%

David is an active duty member of the U.S. Air Force. Assuming he and the property meet the qualifications, which type of mortgage may be the best option for him? A conventional loan A Ginnie Mae-originated loan An FHA loan A VA-guaranteed loan

A VA-guaranteed loan

Rhonda and her husband filed for bankruptcy five years ago. They want to purchase a new house but don't have the best credit score. They've decided to buy the home using an FHA loan. Which of these is a true statement? A minimum down payment of 3.5% is required. Mortgage insurance is not required. The loan-to-value ratio must be less than 80%. They must have PMI.

A minimum down payment of 3.5% is required.

Your clients, the Schwans, are financing their home purchase. They will most likely get their loan from ______. A primary lender A secondary lender A subprime lender A supra-prime lender

A primary lender The primary mortgage market funds the loans; the secondary mortgage market purchases those loans from primary lenders and services them.

Permits the lender to make the loan immediately due and payable if a borrower defaults. Acceleration Pre-payment penalty Due-on-sale

Acceleration

Also called "constant payment method." Straight-Line Loan Amortized Loan

Amortized Loan

Amount of combined principal and interest paid each month remains the same over the loan term. Straight-Line Loan Amortized Loan

Amortized Loan

How does the lender determine whether the property is worth the sales price? Appraisal Demographics of the area Prior history with borrower Style of home

Appraisal

The buyer takes on the seller's mortgage and liability for the note. Assumption of a mortgage Free and clear Subject to existing mortgage

Assumption of a mortgage

When must lenders provide borrowers with a disclosure statement regarding finance charges, annual percentage rate, etc.? At loan application or within three days after loan application Prior to loan application Prior to or within 10 days after the loan application Prior to or within three days after the loan application

At loan application or within three days after loan application

Borrower discharges or restructures all debts (not just property loan) Bankruptcy Reinstatement Deed in lieu Loan modification Short sale

Bankruptcy

When considering loan risk, which two items will lenders consider in equal measure? Borrower and property Credit and employment Debt and income Loan and value

Borrower and property

Loans for ______ purposes don't require TILA disclosure. Business Consumer Housing Personal

Business Loans for commercial purposes don't require TILA disclosure. Loans for personal purposes do, even when the collateral used is a business.

How does the Fed maintain a balanced economy? By limiting the number of loans a bank may originate By purchasing loans on the secondary market By regulating the flow of available funds and interest rates By shutting down the stock market

By regulating the flow of available funds and interest rates

A borrower's credit history and willingness and desire to repay a loan are elements of which C of credit? Capacity Capital Character Collateral

Character

National banks that offer consumer and business loans Insurance companies Investment groups Commercial banks Credit unions Savings and loan associations

Commercial banks

Requires lenders to demonstrate they serve the community's low- to moderate-income housing needs RESPA Community Reinvestment Act Truth in Lending Act Equal Credit Opportunity Act

Community Reinvestment Act

What's it called when a borrower's installment payment remains relatively the same over the life of the loan? Constant payment method Graduated payment Negative amortization Straight loan

Constant payment method

TransUnion, Experian, and Equifax Credit Score Credit Report Credit Bureau

Credit Bureau

History of credit-related actions and inquiries compiled based on information provided by credit bureaus Credit Score Credit Report Credit Bureau

Credit Report

Obtained free (annually) through AnnualCreditReport.com Credit Score Credit Report Credit Bureau

Credit Report

Calculated based on information provided by credit bureaus Credit Score Credit Report Credit Bureau

Credit Score

FICO Credit Score Credit Report Credit Bureau

Credit Score

Number ranging from 300 to 850 that signifies credit risk Credit Score Credit Report Credit Bureau

Credit Score

Member-based cooperatives that provide credit for loans Insurance companies Investment groups Commercial banks Credit unions Savings and loan associations

Credit unions

Borrower surrenders the deed to the lender Bankruptcy Reinstatement Deed in lieu Loan modification Short sale

Deed in lieu

Type of prepaid interest that borrowers pay to lower a loan's interest rate Interest Prepayment penalty Discount point

Discount point

The three companies that track credit for lenders are TransUnion, Equifax, and Experian. Which of the following is a true statement? Each company a uses a slightly different scoring system Each company posts the borrower's FICO® Score Scoring is consistent across the three companies The higher the score, the higher the credit risk

Each company a uses a slightly different scoring system

Prohibits lenders from discriminating based on protected class RESPA Community Reinvestment Act Truth in Lending Act Equal Credit Opportunity Act

Equal Credit Opportunity Act

Which of the following prohibits lenders from discriminating based on protected class status? Community Reinvestment Act Equal Credit Opportunity Act RESPA Truth in Lending Act

Equal Credit Opportunity Act

Lenders don't have to disclose to borrowers that there are loans available without prepayment penalties. True False

False

Loan assumptions make the most sense for the buyer if interest rates have fallen since the seller's loan was originated. True False

False

Conventional, FHA, VA, and rural development loans Farmer Mac Fannie Mae Ginnie Mae

Fannie Mae

What institution was established in 1938 to purchase FHA-insured loans from individual lenders, group the loans together, and sell them as mortgage-backed securities to investors? Fannie Mae (FNMA) Farmer Mac Freddie Mac (FHLMC) Ginnie Mae (GNMA)

Fannie Mae (FNMA)

Agricultural and rural loans Farmer Mac Fannie Mae Ginnie Mae

Farmer Mac

Who or what determines the amount that can be set aside in reserve funds? Borrowers Builders Federal regulations Lenders

Federal regulations

A loan whose principal and interest payment remains the same over the life of the loan.

Fixed rate loan

Roth IRA rules state that a first-time homebuyer can withdraw funds from a Roth IRA under which of the following conditions? Account has been open for 10 years or longer Borrower must not have other money saved Distribution does not exceed $15,000 Funds are used directly toward home acquisition (down payment, closing costs, etc.)

Funds are used directly toward home acquisition (down payment, closing costs, etc.)

A loan where the payments are adjusted (usually up) at specified periods over the life of the loan. Straight Graduated payment Growing equity Adjustable rate Shared appreciation Amortized

Graduated payment

Payments gradually adjust (usually upward) based on a predetermined schedule and amount over five to ten years, then remains consistent for the rest of the loan term.

Graduated payment mortgage

Which of the following loan transactions would be exempt from TILA disclosure requirements? Duplex, with office building used as collateral Grocery store, with personal funds used as collateral Hobby farm Vacation home

Grocery store, with personal funds used as collateral

A fixed-rate mortgage where the monthly payments increase over time according to a set schedule. Straight Graduated payment Growing equity Adjustable rate Shared appreciation Amortized

Growing equity

A borrower is using a gift to fund part of his home purchase. What criteria for the gift holds the most weight in the lender's eyes? How long ago the gift was given How the gift giver is related The amount of the gift The terms for repayment

How long ago the gift was given

What is one way to improve your debt-to-income ratio without reducing your debt? Increase credit card balance Increase debt Increase expenses Increase income

Increase income

Groups that lend to those who want to avoid conventional financing Insurance companies Investment groups Commercial banks Credit unions Savings and loan associations

Investment groups

In the eyes of a lender, when financing a residence, what advantage does an investor have over owner-occupied borrowers? Investors always pay cash. Investors are less of a risk. Investors can use rental income to qualify. Investors maintain their property better.

Investors can use rental income to qualify.

Why is it important for the borrower to assure the lender that a title is clear of defects? It gives the lender permission to foreclose on a property in case of borrower default. It provides a good and marketable title for the lender to sell upon foreclosure. It allows the lender to declare the entire balance on the title due immediately.

It provides a good and marketable title for the lender to sell upon foreclosure.

Lenders look at a HELOC balance of less than $50,000 as if ________________. It were a credit card It were an asset It were a paid mortgage It were cash

It were a credit card Unpaid balances on a HELOC are similar in the eyes of a lender to debt incurred on a credit card.

When a seller acts as the lender for the buyer, who purchases the property for an agreed-upon price. Land contract Wrap-around Purchase money

Land contract

What could be a consequence if there were no secondary mortgage market? Interest rates would fall. Lenders might not have funds available to make new loans to the public. There wouldn't be any institutions available to service loans. Unemployment would rise.

Lenders might not have funds available to make new loans to the public.

An adjustable rate mortgage has an initial interest rate of 5%. When the first interest rate adjustment date arrives, the rate can be adjusted a maximum of 1%. At all subsequent adjustment dates, the interest rate can be adjusted a maximum of 2%. The highest rate of interest that may be charged at any given time is 9%. What does the 9% rate represent? Initial cap Lifetime cap Maximum cap Periodic cap

Lifetime cap

Which practice involves talking the consumer into refinancing over and over so a lender can charge fees? Loan flipping Poison lending Premeditated lending Turnover lending

Loan flipping is a tactic that predatory lenders use.

Lender restructures loan to terms more favorable for the buyer Bankruptcy Reinstatement Deed in lieu Loan modification Short sale

Loan modification

What is it called when the borrower and lender work together to restructure the terms of a home loan? Deed in lieu of foreclosure Deficiency judgment Loan modification Reinstatement

Loan modification The lender and borrower work together to change the terms of the loan to keep the borrower in the home, which keeps the lender from foreclosing. Don't confuse this with reinstatement, which doesn't affect loan terms.

Put a portion of any bonuses, tax returns, or other extra money toward the mortgage. Snowball 1/12 plan Set dollar over Bi-weekly plan Lump sum plan

Lump sum plan

A legally binding document that is a lien against a property

Mortgage

A legally binding instrument that creates a lien on a piece of property

Mortgage

Darrel loves working in the mortgage lending industry. On a daily basis, he works with multiple lenders to find and negotiate the best deals for his customers. What is Darrel's profession? Mortgage banker Mortgage broker Mortgage servicer Real estate investor

Mortgage broker

The Lender

Mortgagee

The borrower

Mortgagor

Which organization establishes relationships with financial institutions to offer home ownership programs that include down payment assistance through grants and favorable terms? HUD NHF OSHA RESPA

NHF National Homebuyer Fund

Consumers may use Roth IRA funds to obtain the down payment for their home purchase. Which of the following scenarios is allowed? Clayton, who has had his IRA for 10 years, borrows $15,000 from it for his home purchase. Desiree, who has held her Roth IRA for three years, borrows $7,000 for her down payment. Mary borrows $5,000 from Jack's Roth IRA for her home purchase. Nevil, who has held his Roth IRA for five years, borrows $10,000 for his down payment.

Nevil, who has held his Roth IRA for five years, borrows $10,000 for his down payment. The fund must be held for at least five years, and the maximum amount that may be withdrawn for a bona fide home purchase is $10,000.

What type of foreclosure is commonly used when a deed of trust is the security instrument? Eviction Judicial Non-judicial Strict

Non-judicial Because the right to sell in the event of a default is part of the deed of trust's language, a non-judicial foreclosure may be used.

With this type of loan, personal property is included with the real property in the sale. It's commonly seen in commercial real estate, but you may also see this in the sale of furnished condominiums. Blanket mortgage Package mortgage Shared equity mortgage Wrap-around mortgage

Package mortgage

You've just learned that your buyer, Kirk, can't obtain a qualified mortgage for his dream home because his debt-to-income ratio would be above the threshold. What is Kirk's best option? Get a sub-prime loan. No options here; Kirk will need to wait until his debt-to-income ratio meets qualified lending standards. Offer a shared equity situation with the lender. Pay off his other debt and/or increase monthly income.

Pay off his other debt and/or increase monthly income.

This letter is created after a borrower submits information about their income and debts, which is verified by the lender, who then estimates how much a borrower qualifies for. Approval letter Disclosure letter Pre-approval letter Pre-qualification letter

Pre-approval letter

Stipulates that the lender may be owed additional interest if the borrower pays the loan off prior to the full loan period. Acceleration Pre-payment penalty Due-on-sale

Pre-payment penalty

Fee that's charged when a borrower pays a loan off early Interest Prepayment penalty Discount point

Prepayment penalty

In which market do lenders that originate real estate loans operate? Government market Primary mortgage market Real estate investment trust market Secondary mortgage market

Primary mortgage market

A promise by a borrower to repay the loan

Promissory note

Financing in which the buyer gives the seller a mortgage toward the purchase price of the home. Land contract Wrap-around Purchase money

Purchase money

Tom, the seller, is helping the buyer with financing. Tom will give this mortgage to the buyer, and the money will go toward the down payment. What kind of mortgage is this? Package mortgage Purchase money mortgage Reverse mortgage Wraparound mortgage

Purchase money mortgage

Which of the following is a mortgage where the consumer cannot later claim that the lender did not comply with the ability to repay requirements? Qualified mortgage with ability to repay Qualified mortgage with a safe harbor status Qualified mortgage with cash payment option Qualified mortgage with the rebuttable presumption

Qualified mortgage with a safe harbor status

Which of the following is a type of subprime loan usually offered to consumers with insufficient or marginal credit history? Qualified mortgage with a safe harbor Qualified mortgage with the rebuttable presumption Qualified with ability to repay Qualified with cash

Qualified mortgage with the rebuttable presumption

Requires written disclosure of estimated settlement costs to the borrower RESPA Community Reinvestment Act Truth in Lending Act Equal Credit Opportunity Act

RESPA

Which consumer protection act enacted in 1974 prohibits kickbacks and referral fees and requires written lender disclosure of estimated and final settlement costs? ECOLA Real Estate Settlement Procedures Act The Community Reinvestment Act The Equal Credit Opportunity Act

Real Estate Settlement Procedures Act (RESPA)

Borrower pays all amounts and fees owed, possibly entire loan balance Bankruptcy Reinstatement Deed in lieu Loan modification Short sale

Reinstatement

Long-term loan made up of short-term loans. At specified periods, borrowers have the option to renew their loan or immediately pay the remaining loan balance and interest due.

Renegotiable-rate mortgage

Allows a person to stay in one's home while living off of the equity by "selling" it to a lender who makes payments to the homeowner in exchange for ownership interest in the property.

Reverse mortgage

Generally used by the elderly to receive income from the equity in their home. Reverse mortgage Home equity

Reverse mortgage

With a land contract, who retains the title to the property? Beneficiary Buyer Seller Trustee

Seller

Borrower sells property for less than the loan balance and closing costs; lender approval required Bankruptcy Reinstatement Deed in lieu Loan modification Short sale

Short sale

When another bill is paid off, add that amount to the mortgage payment. Snowball 1/12 plan Set dollar over Bi-weekly plan Lump sum plan

Snowball

A mortgage where only interest is paid until the end of the term, when the principal is paid. Straight Graduated payment Growing equity Adjustable rate Shared appreciation Amortized

Straight

Also called "constant amortization." Straight-Line Loan Amortized Loan

Straight-Line Loan

What is a deed in lieu of foreclosure? The borrower pays back their loan, thus avoiding foreclosure. The borrower sells their property, but for less than the amount owed on their property. The borrower turns the deed over to the lender rather than face foreclosure proceedings. The lender receives the deed as a result of foreclosure proceedings.

The borrower turns the deed over to the lender rather than face foreclosure proceedings.

Which of the following statements is true of the secondary mortgage market? Borrowers have a say in which entity may purchase their mortgages in this market. Lenders don't purchase loans from other lenders in this market. The borrower's rights are unaffected. The loan originator continues to service the loan after it's sold.

The borrower's rights are unaffected.

How do the primary and secondary mortgage markets work together? The primary market packages loans to sell to the secondary market. The primary market regulates the secondary market. The secondary market packages loans to sell to the primary market. The secondary market regulates the primary market.

The primary market packages loans to sell to the secondary market.

Jacqueline found a ready, willing, and able buyer for her client's condo, with a sales price of $20,000 more than the asking price. However, the appraisal came in just under the asking price. Which number will the lender use to calculate the loan-to-value ratio? A middle point between the two numbers A weighted average based on the sales price, appraisal amount, and recent sales The larger number, as a buyer has already been found The smaller number

The smaller number

A qualified mortgage may not include interest-only payments and balloon payments, or lender fees and points that total more than 3% of the loan because these are considered ______ in relation to the qualified mortgage. FHA and VA loan provisions Qualified and allowable Toxic loan features Updated financing provisions

Toxic loan features

A term that requires disclosure of other terms related to the loan; if any such term is used, all terms must be disclosed

Triggering term

In addition to the assumed loan, the buyer will need to pay the seller for any equity in the property. True False

True

Often, if a buyer tries to assume a seller's loan, a due-on-sale clause in the seller's mortgage is triggered. True False

True

Private lenders that aren't part of the federal lending system don't fall under usury laws True or False

True

Promissory Note is a negotiable instrument. True or False

True

Requires disclosure of loan terms and costs RESPA Community Reinvestment Act Truth in Lending Act Equal Credit Opportunity Act

Truth in Lending Act

Which of the following is a borrower eligibility requirement for CalHFA? California veteran Doesn't intend to reside in the home for the length of the loan Owned a home before U.S. citizen, permanent resident, or qualified alien

U.S. citizen, permanent resident, or qualified alien

As a real estate licensee, you should ______. Be willing to loan money to your clients for their down payment Calculate a buyer's loan pre-qualification Know the benefits of reverse mortgages Understand what helps your buyer qualify for a mortgage

Understand what helps your buyer qualify for a mortgage

Which of the following is the process the lender uses to evaluate whether to make the loan? Application Appraisal Commitment Underwriting

Underwriting

How much may qualified consumers borrow from their Roth IRA to obtain funds for the down payment of a home purchase? Up to $10,000 Up to $20,000 Up to $25,000 Up to 50% of their fund balance, or $5,000, whichever is less

Up to $10,000

Which of the following defines when a lender charges a borrower more than the highest allowable interest rate? Default Discount points Note Usury

Usury

Financing that wraps the new buyer's mortgage around the seller's existing mortgage. Land contract Wrap-around Purchase money

Wrap-around

In which of the following situations may the borrower be required to pay for PMI? A borrower is purchasing a $100,000 home using a conventional loan of $80,000 with a $20,000 down payment. A borrower is purchasing a $100,000 home using an FHA loan of $90,000 with a $10,000 down payment. A borrower is purchasing a $100,000 home using a conventional loan of $90,000 with a $10,000 down payment. A borrower is purchasing a $100,000 home using a VA loan of $100,000 with no down payment.

A borrower is purchasing a $100,000 home using a conventional loan of $90,000 with a $10,000 down payment. Since the homeowner only has a down payment of 10% and is financing the rest, the lender may require PMI.

Shelly's flower business is blooming and it's time for her business to grow. She plans to take out a business loan to open two more shops on the north side of town. Which lending institution would she most likely go to for the loan? A commercial bank A credit union An investment group A savings and loan

A commercial bank

Which of the following statements about the promissory note is true? A promissory note is a negotiable instrument and can be transferred to a secondary holder who has the right to enforce the note's terms. A promissory note isn't a legal document. A promissory note isn't transferable, so it must be held by the original lender until paid in full. A promissory note serves as collateral for a mortgage loan.

A promissory note is a negotiable instrument and can be transferred to a secondary holder who has the right to enforce the note's terms.

A loan with a rate that fluctuates based on the economic index with which it is associated. Straight Graduated payment Growing equity Adjustable rate Shared appreciation Amortized

Adjustable rate

A loan whose rate is adjusted, usually annually, based on the behavior of the economic index with which it is associated.

Adjustable rate mortgage

What's a discount point? An upfront charge to make up for the difference between the rate the borrower is receiving and the rate the lender normally requires The amount a borrower charges a lender for using its money, charged either monthly or annually The amount a lender charges to initiate a loan The interest rate at which a bank is allowed to borrow money from the Fed; this rate changes with the stock market

An upfront charge to make up for the difference between the rate the borrower is receiving and the rate the lender normally requires

Pay half the mortgage payment every two weeks instead of once per month. Snowball 1/12 plan Set dollar over Bi-weekly plan Lump sum plan

Bi-weekly plan

Requires borrower to repay the loan when transferring ownership. Acceleration Pre-payment penalty Due-on-sale

Due-on-sale

The secondary mortgage market buys loans from the primary market. In other words, it helps ______. Avoid foreclosure of borrower properties Ensure funds are available to borrowers Prevent bank runs by consumers Streamline lenders' bankruptcy processes

Ensure funds are available to borrowers

A prepayment penalty is a fee charged to the lender. True False

False

Joann purchased her house with a mortgage loan from her friendly neighborhood bank. Which of these most likely happened to Joann's loan soon after she received it from her bank? Her bank foreclosed on the loan. Her bank sold it on the secondary market as an investment product. She received another loan on the secondary market when her bank demanded full payment. She sold the loan on the primary market for a lower interest rate.

Her bank sold it on the secondary market as an investment product.

Loan taken against the equity in a home. Reverse mortgage Home equity

Home equity

Companies that finance mortgage loans, but specialize in insurance products Insurance companies Investment groups Commercial banks Credit unions Savings and loan associations

Insurance companies

Which of these provides some protection to lenders in the event that the borrower obtaining a conventional loan does not have a down payment of 20 to 25%? Acceleration clause Mortgage insurance premium Prepayment penalty Private mortgage insurance

Private mortgage insurance PMI) insures the payment of that top portion of the loan and protects the lender from losing its shirt in a buyer default. Lenders generally require this if the borrower does not provide a 20-25% down payment.

A type of renegotiable loan in which the interest rate is renegotiated at specified intervals (usually every five years).

Rollover mortgage

Which type of lender specializes in taking in savings deposits and then lending money out to consumers through mortgages and other loans? Credit union Mortgage banker Mortgage broker Savings and loan

Savings and loan

In which market do lenders purchase packaged loans? Housing market Primary mortgage market Secondary mortgage market Stock market

Secondary mortgage market

Pay a specific additional amount with each mortgage payment. Snowball 1/12 plan Set dollar over Bi-weekly plan Lump sum plan

Set dollar over

A loan where the borrower receives a below-market interest rate in exchange for the lender receiving equity. Straight Graduated payment Growing equity Adjustable rate Shared appreciation Amortized

Shared appreciation

Mortgage in which the borrower initially receives an interest rate below the going market rate. In exchange, the lender receives equity or a percentage of the appreciation in the property's market value.

Shared appreciation mortgage

Payments change over the term of the loan, generally with higher payments at the beginning of the loan term. Straight-Line Loan Amortized Loan

Straight-Line Loan

The buyer takes title of the property with the seller's lien still in place. Assumption of a mortgage Free and clear Subject to existing mortgage

Subject to existing mortgage

A loan from the equity in a property that is used to obtain another property. Bridge loan Swing loan

Swing loan

Who or what entity has legal title to a financed property in a lien theory state? The beneficiary The borrower The lender The state

The borrower

When a mortgage is used as a security instrument, who holds the mortgage and the promissory note? The borrower holds the mortgage, and the lender holds the note. The borrower holds the mortgage and the note. The lender holds the mortgage, and the borrower holds the note. The lender holds the mortgage and the note.

The borrower holds the mortgage, and the lender holds the note.

Which of the following is a property requirement for CalVet loans? The property can be transferred, encumbered, or leased as the owner sees fit. The property cannot be a mobile or manufactured home. The property must be a unit in a planned unit development (PUD). The property must be owner-occupied.

The property must be owner-occupied.

When a deed of trust is used as a security instrument, who holds the deed and the note? The lender holds the deed and the note The lender holds the deed, and the trustee holds the note. The trustee holds the deed, and the lender holds the note. The trustee holds the mortgage and the note.

The trustee holds the deed, and the lender holds the note.

A 30-year loan made up of short-term loans when, at specified intervals, borrowers have the option to renew their loan or immediately pay off the loan is a ________________________ (rollover mortgage; renegotiable-rate mortgage) If the borrower renews, the interest rate may change based on index changes.

renegotiable-rate mortgage

Another type of renegotiable loan, ________________________ (rollover mortgage; renegotiable-rate mortgage) Ihas interest rate changes at specified intervals, but the borrower doesn't need to make a decision to renew the loan or pay it off.

rollover mortgage

Sondra, a buyer, signs all the required mortgage documentation, promising to make all payments to her lender. Unfortunately, Sondra falls on hard times and misses multiple payments, and the bank indicates that it's going to foreclose on her. The foreclosure proceedings are more difficult for the lender because Sondra holds the title to the land. What kind of state does Sondra live in? A deed of trust theory state A lien theory state An intermediary theory state A title theory state

A lien theory state

Debt that is paid off by making periodic payments, mostly consisting of interest and principal. Straight Graduated payment Growing equity Adjustable rate Shared appreciation Amortized

Amortized

What are the two PMI cancellation scenarios? Automatically when the borrower's equity reaches 20% of the original property value Automatically when the borrower's equity reaches 22% of the original property value Automatically when the borrower's equity reaches 25% of the original property value By request when the borrower's equity reaches 20% of the original property value By request when the borrower's equity reaches 22% of the original property value By request when the borrower's equity reaches 25% of the original property value

Automatically when the borrower's equity reaches 22% of the original property value By request when the borrower's equity reaches 20% of the original property value This can occur automatically when the loan balance hits 78% or by borrower request when the loan balance hits 80% equity. Borrowers should, however, contact their lender for questions about cancelling PMI.

A loan that provides funds in addition to an existing loan until permanent financing can be obtained. Bridge loan Swing loan

Bridge loan

A temporary loan often used by buyers who have not yet closed on their prior property.

Bridge loan

A reserve fund may also be called a(n) ______ account. Additional Escrow Insurance Taxable

Escrow

Lauren obtained a loan that's insured and that only required a down payment of 3.5%. Which of these is most likely the type of loan Lauren has? Conventional FHA Home equity line of credit VA

FHA

Any financial institution with deposits that are insured by a federal government agency can sell mortgages to which institution? Fannie Mae (FNMA) Farmer Mac Freddie Mac (FHLMC) Ginnie Mae (GNMA)

Freddie Mac (FHLMC)

The seller is released from all liabilities. Any loan balance is paid off prior to or at closing. Assumption of a mortgage Free and clear Subject to existing mortgage

Free and clear

Loans from any financial institution where the federal government insures the deposits Farmer Mac Fannie Mae Ginnie Mae

Ginnie Mae

What institution was formed in 1968 and took over the sale of the government loan market? Fannie Mae (FNMA) Farmer Mac Freddie Mac (FHLMC) Ginnie Mae (GNMA)

Ginnie Mae (GNMA)

Fixed rate mortgage where the monthly payments increase over time according to a set schedule or index

Growing equity mortgage

The amount charged for use of the money Interest Prepayment penalty Discount point

Interest

What purpose does the promissory note serve? It gives the lender the right to begin foreclosure proceedings if the buyer defaults. It gives the trustee the right to begin foreclosure proceedings if the buyer defaults. It's a promise made to the buyer that the lender will not foreclose as long as the note is kept current. It's a promise the buyer makes to the lender that the note will be repaid in full.

It's a promise the buyer makes to the lender that the note will be repaid in full.

The loan of equity in a property to purchase another property.

Swing loan