CA RE Financing
A buyer with a 20-year, $419,000 loan at a 4.25% interest rate has a monthly principal and interest payment totaling $2,594.59. If $1,483.95 is interest, how much is applied toward principal for that payment?
$1,110.64
A buyer has a 30-year, $400,000 loan with a 7% interest rate. How much of the first month's mortgage payment is interest?
$2,333.33
A buyer has a 30-year, $750,000 loan with a 5.75% interest rate. How much of the first monthly payment is interest?
$3,593.75
A buyer with a 15-year, $250,000 loan at a 5.5% interest rate has a monthly principal and interest payment totaling $2,042.71. What's the total amount the borrower will pay back over the life of the loan?
$367,687.80
A buyer is purchasing a property for $500,000. His lender's loan-to-value ratio is 90%. How much is the buyer financing?
$450,000
A borrower has a 30-year, $500,000 loan with an interest rate of 6.25%. His monthly principal and interest payment is $3,078.59. What's the total amount of interest he'll pay over the course of the loan?
$608,292.40
Your client, Judy, with a credit score of 620, has been approved for an FHA loan for a home with a sales price of $200,000. What is the minimum down payment that will apply?
$7,000
You're working with a buyer who's purchasing a home that appraised at $80,000. The buyer is obtaining a 90% loan, and the lender will charge a one-point origination fee at closing. How much will the loan origination fee be?
$720
A buyer with a $750,000 loan has a monthly principal and interest payment of $4,376.80. If $3,593.75 is interest, what is the new principal balance after the first payment is applied?
$749,216.95
A buyer obtained a 30-year, $205,000 loan with a 5.0% interest rate. How much of the monthly payment is interest?
$854.17
Which of the following percentages is an allowable loan origination fee?
2%
In the residential mortgage market, charging borrowers more than ____________ over market rate for interest is considered a predatory lending practice.
5%
Glenn is purchasing a home for $400,000. The property appraised at $415,000, and Glenn is financing $300,000. What's the loan-to-value ratio?
75%
Which of the following describes housing ratio?
A calculation of a borrower's monthly housing obligation, including principal, interest, taxes, insurance, and any homeowners or condo association fees, as a percentage of the monthly gross income
Which of the following describes loan-to-value ratio?
A calculation that describes the amount being borrowed compared to the value of a property
Cathy is hoping to purchase a home using a VA loan. A VA-assigned real estate appraiser is required to provide ____________for the property.
A certificate of reasonable value
With a VA loan, the borrower must receive a certificate of eligibility. What must the properly receive?
A certificate of reasonable value
What is a loan origination fee?
A fee a lender charges for processing a loan
The VA guaranteed loan uses to pay for the costs of the program.
A funding fee
Chuck is selling his properly to Kyle. Chuck has agreed to finance the transaction for Kyle, who will make payments to Chuck while Chuck retains the legal title to the property. What's this an example of?
A land contract
Emily has great credit and was able to secure a loan for her oceanside dream home. Her 30-year, fixed-rate loan is for an amount that's above conventional loan limits. What type of loan does Emily have?
A non-conforming loan
Which of these individuals will have a unique identification number in the Nationwide Mortgage Licensing System and Registry?
A real estate licensee with an MLO endorsement
What does ARM stand for?
Adjustable Rate Mortgage
Which of the following is true about the Federal Housing Administration's qualifying standards for a mortgage loan?
Are somewhat less stringent than standards for conventional loans
Which of these is a reason that the deed of trust is the standard security instrument used in California real estate transactions?
Because California foreclosure laws allow a statutory right of redemption of up to one year with a judicial foreclosure.
Bill's loan is secured by a mortgage. Who holds legal title when this securily instrument is used?
Bill
Fatima is using a VA loan to purchase a home from Sue. Sue agrees to pay Fatima's closing costs. Which of the following statements is true?
Closing costs aren't considered a seller concession.
Nick and Nora are purchasing their first home. Like most homebuyers, they obtain a mortgage loan, using the property as
Collateral
Which of the following describes amortized debt?
Debt that's paid off by making periodic payments
A trustee is holding title to Cassandra's house until the loan is paid in full. Which type of security instrument was used?
Deed of trust
The ______________ was enacted in 2010 to create stricter regulation of the financial services industry to reduce costs for consumers from (for instance), undisclosed kickbacks.
Dodd-Frank Wall Street Reform and Consumer Protection Act
The Real Estate Settlement Procedures Act protects consumers by
Eliminating illegal kickbacks and referral fees among settlement service providers and requiring lender disclosures as part of a residential real estate transaction involving credit
The secondary mortgage market buys loans from the primary market. How does this aid the lending market?
Ensure funds are available to borrowers
The ____________ was enacted in 1974 as a response to discriminatory practices by lenders. It was created to help ensure that access to consumer credit was not based on protected class status, but on creditworthiness.
Equal Credit Opportunity Act
Lydia put the minimum 3.5% down on her $210,000 home. She'll have to pay a mortgage insurance premium (MIP). What type of loan does lydia have?
FHA
Acme Bank, a primary lender, sells its loans on the secondary market, so it makes sure that all its loans meet ___________ requirements.
Fannie Mae and Freddie Mac
If Acme Bank, a primary lender, wants to sell its loans on the secondary market, it would be easier for it to do so if its loans meet
Fannie Mae and Freddie Mac guidelines
Which type of mortgage has an interest rate that remains constant over the life of the loan?
Fixed-rate
With what type of loan do the principal and interest payments remain the same for the life of the loan?
Fixed-rate
Which of these is a reason that the deed of trust is the standard security instrument used in California real estate transactions?
Foreclosing judicially gives the borrower a statulory right of redemption of up to one year in California.
Borrowers obtaining a VA loan aren't required to have a down payment. However, they are required to pay
Funding fee
California real estate licensee Carmen has an MLO endorsement on her license. Which of these actions is she required to take?
Include her MLO unique identification number on her business cards.
In California, how has state law modified the way the deed of trust works?
It creates a lien on the property, and the borrower, not the trustee, holds legal title.
Which type of support does the USDA Rural Development Program offer to its target audience of rural residents?
It offers direct loans, grants, and loan guarantees for housing and other rural needs, as well as advisor services to agricultural producers.
What's the purpose of the Equal Credit Opportunity Act?
It requires lenders to make credit equally available to all creditworthy applicants, regardless of the applicant's protected class status.
Krista is obtaining a loan to buy a home. Her loan agreement consists of one document called a note and one called a deed of trust. What is the role of the note?
It states who owes money to whom, how much, and how it will be repaid.
In a fitle theory state, which of the following is a true statement?
It's generally much easier for a lender to foreclose on a property.
What could be a consequence if there were no secondary mortgage market?
Lenders might not have funds available to make new loans to the public.
Which of these would most likely be found in the "potentially negative items" section of a credit report?
Lien
What information is listed on the promissory note?
Loan amount and schedule of repayment
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 Broker
Which of these names is also known as the California Real Property Loan Law?
Mortgage Loan Broker Law
Mick focuses on originating mortgage loans at a company that has in-house loan processors and underwriters. The options he offers consumers are limited to the products his company offers. What's Mick's position?
Mortgage banker
When using an amortization chart, you use the interest rate and the loan term to arrive at a factor, such as 5.17808. Now what do you do?
Multiply the number of thousands in the loan by the factor.
Yancey purchased a home six months ago using a VA loan. Due to an inheritance, he is suddenly able to pay off his mortgage. Will he pay a pre-payment penalty?
No
Which is one of the benefits of the USDA loan program?
No down payment is required
Robin has great credit and was able to secure a loan for her ocean-side dream home. Her 30-year, fixed-rate loan is for an amount that's above conventional loan limits. What type of loan does Robin have?
Non-conforming loan
Iris is planning to purchase her first home. Based on what you know about the nature of real estate finance in our country, which approach is she most likely to use?
Obtaining a loan to purchase the home
Danica and Rae purchased a home using a conventional fixed -rate loan that was 90% of the purchase price, since they could only afford a 10% down payment. Their monthly payment will include ____________ but only for a portion of the loan term.
PMI
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.
Package mortgage
Scott is a California real estate licensee with an MLO endorsement. Arthur, his assistant, does not have an MLO endorsement but he does have a real estate license. Which of these activities must Scott perform?
Presenting a loan offer to a consumer for acceptance
One of these actions is considered an MLO activity. Which one?
Presenting a revised loan offer to the consumer after they requested a lower rate
Amy purchased a new home and obtained financing through a bank, called Natula Bank. Natula originated the loan, but before Amy's first mortgage payment was due, it sold her loan to CitiMortgage. As a loan originator, what market is Natula Bank operating in?
Primary mortgage market
In which market do lenders that originate real estate loans operate?
Primary mortgage market
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%?
Private mortgage insurance
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?
Purchase money mortgage
The purpose of the Truth in Lending Act (TILA) is to
Require lenders to make disclosures that allow consumers to compare the costs of making a purchase using credit from different lenders, and to compare those with the cost of using cash
A loan that's offered based on a homeowner's equity in which funds are drawn over time and the bank gains corresponding property ownership is called a
Reverse annuity mortgage
Monty retired 10 years ago and would like to see the world, but his retirement account won't support his desire to travel. Monty heard of a loan that would allow him to take advantage of the equity in his home by getting monthly payments from the bank by using his house as collateral. What is this type of loan called?
Reverse annuity mortgage (RAM)
Because of the funding fee required for a VA loan, a borrower with no down payment funds saved should
Roll the funding fee into the loan
Which of these items did the Federal Housing Administration (FHA) implement to stabilize and improve the mortgage market?
Set construction standards for homes purchased with FHA loans
The Federal Housing Administration's mission includes ____________through the establishment of lending standards and by insuring mortgages.
Stabilizing the mortgage market
When a buyer takes over payments on a loan without telling the lender, this is called a purchase
Subject to existing financing
____________make homeownership available for many who otherwise could not qualify for a mortgage loan.
Subprime lenders
The FHA has helped to significantly improve the mortgage market through
The introduction of the long-term amortized loan
When calculating loan-to-value ratios, which of the following will be used by the lender?
The lesser of the sales price or appraisal value
How do the primary and secondary mortgage markets work together?
The primary market packages loans to sell to the secondary market.
The Farm Credit System funds are acquired from
The sale of debt securities and international money markets
Which of the following statements is true about national lending intuitions?
They sell packaged loans to investors.
When Stacy's clients ask her if she can recommend a mortgage broker, she promptly gives them the name of the best mortgage broker she knows, Gary Jones. Later, she always receives a check from Gary as payment for the referral. Would this be legal or illegal under the Real Estate Settlement Procedures Act (RESPA)?
This is illegal under RESPA because it's considered a kickback between settlement service providers.
Lawrence is a buyer closing on a home purchase for which he's obtaining financing. He receives a Loan Estimate from his lender. What's one purpose of this document?
To provide the estimated closing costs for Lawrence's loan
What's another term for back-end ratio?
Total debt ratio
The Federal Housing Administration is part of the
U.S. Department of Housing and Urban Development
Which of the following is a borrower eligibility requirement for CalHFA?
U.S. citizen, permanent resident, or qualified alien
Sylvia is a single mother living in a small town surrounded by ranch and farm land. She would like to buy a house there, but her income level and her status as an independent contractor makes it hard for her to qualify for a conventional loan. What government program might provide her with a direct loan to purchase a home?
USDA Rural Development Single Family Housing Program
Which of the following best describes collateral?
Using a house as security on a mortgage
Sissy is a veteran who used her full entitlement to purchase a home. The loan has since been paid off, and Sissy still owns the home. Now, she'd like to buy a second home using another VA loan. Is Sissy allowed to do this?
Yes, Sissy can apply to have her entitlement restored and can buy a second house using a VA loan.
With which type of mortgage does the interest rate vary according to a specified index?
adjustable rate
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?
commercial bank
Which type of lender is a member-based cooperative that provides credit for auto loans and home loans, takes deposits, and offers savings vehicles and money markets?
credit union
With this common loan type, the home is used as collateral and the loan creates a second mortgage if the first mortgage hasn't been paid off.
home equity
In the secondary market, how are mortgages grouped together and sold?
mortgage backed securities
How long is an MLO endorsement valid?
one year
Rachel loves convenience. As you can imagine, she was thrilled when she was able to finance her mortgage through the same institution where she deposits her payroll checks. Which of these most likely financed Rachel's mortgage?
savings and loan
Which type of lender specializes in taking in savings deposits and then lending money out to consumers through mortgages and other loans?
savings and loan
Loans made to high-risk borrowers, at higher interest rates and with higher fees, are
subprime loans