RELE Quiz 4- Chpt. 10 & 11
10-7. So is providing applying for a conventional loan with an 80% loan to value. His stable monthly income is $2950. His recurring monthly dad is total of $375. In the absence of any compensating factors, what is the maximum Monthly mortgage payment he would qualify for,
$687. To calculate the maximum monthly mortgage payment, multiply stable monthly income by the debt to income ratio - 2950×.36 equals 1062 - and then subtract the recurring monthly obligations - 1062 minus 375 equals 687.
10-5. The buyers are applying for a loan with a 80% loan to value. Unless there is compensating factors, their debt to income ratio should not exceed;
36%. For most conventional 80% loans, the Maximum debt to income ratio should be 36%, absence of any compensating factors.
Investor loan is
A loan issued for the purchase of property that will be rented to a tenant rather than owner occupied.
Conforming loan is
A loan made in accordance with that standardized underwriting criteria of the major secondary market agency, Fannie Mae or Freddy Mac and which therefore can be sold to those agencies.
Temporary buydown is
Buy down lowers loans interest rate for only a few years of the term; the monthly payments during the buydown may be level or graduate.
Permanent buydown is
Buy down that lowers the loans interest rate for the entire term.
10-2. One major advantage of a biweekly loan is
Equity bills more quickly since the borrower makes the equivalent of 13 monthly payments per year.
Home Owners Protection Act;
Federal law that requires or - Facilitates the removal of PMI at 78% LTV, however the borrower may have removed at 80% LTV
Recurring obligations is
Financial obligations that a borrower must meet each month, including housing expense, installment debt, revolving debts and other obligations.
Growing equity mortgage - GEM is
Fixed - rate loan with annual payment increases that are used to reduce the principal balance, so that the loan is paid off much more quickly than it would be with ordinary level payments.
10-10. Secondary financing used in conjunction with a conventional loan must be,
In conjunction with a conventional loan may be fully or partially amortized, or interest-only. . Certain restrictions may apply, such as requiring schedule payments and not allowing a balloon payment within the first five years.
Conventional loan
Institutional loan that is not insured or guaranteed by government agency., Loan that is neither FHA nor VA; does not require insurance or guarantee, although today high LTV loans are made along with PMI (private mortgage insurance
Private mortgage insurance -PMI
Insurance used to diminish the risk of hi - LTV conventional loans; provided by private insurance company - instead of a government agency
Affordable housing program is
Loan program that features easier Walfarm Sanders and lower down payment requirements, with eligibility limited to buyers who have Low or moderate incomes are or are purchasing property in a targeted neighborhood.
Two - step mortgage is
Loan that allows the lender to adjust the loans interest rate to the market level at one point during the loan term, such as a 5/25 plan where interest rate is adjusted once after five years.
Biweekly mortgage is
Loan that requires a payment every two weeks instead of once a month; the borrower makes an equivalent of 13 payments per year that's pays loan off early and save considerable amount of interest.
Balloon/reset mortgage is
Loan with an initial term of only 5 to 7 years; at the end of the term, the loan may be reset, or a balloon payment will be required.
Interest - only mortgage is
Loans that allows the buyer to pay only interest during the first part of the long-term.
Jumbo loans are
Loans that exceeds the conforming Loan limits set annually by Freddie mac for fanny Mae based on national median housing prices.
Secondary financing is
Money borrowed to pay part of the required down payment or closing calls for a first loan, when the second loan is secured by the same property that secures the first loan.
10-9. A conditional lender will take an installment debt into consideration when the calculating income ratio is
Only if it has more than 10 payments remaining. Installment payments will be considered when calculating only if more than 10 months weather remain.
10-3. Private mortgage insurance is ordinarily required only if the loan to value ratio is
Over 80% loan to value private mortgage insurance is required.
Debt to income ratio is
Ratio describing the maximum percentage of total monthly income that may be taken up by a proposed housing expense plus all other installment debt payments.
10-4. As a general rule, a buyer who is seeking a loan with a 90% loan to value;
Secondary financing for 5% of the purchase price. As a general rule, secondary financing supplementing a 90% loan to value loan may not exceed 5% of the appraised value or sales price.
Piggyback loan is
Secondary financing used to avoid the payment of private mortgage insurance by keeping the primary loans loan to value ratio at 80% or less, or used to avoid the higher interest rate of a jumbo loan would require.
10-1. A buydown plan is
Seller or third-party pays a lump sum to a lender to reduce the borrowers interest rate. The lower the borrows initial payment amount and makes it easier for the borrower to qualify
10-6. Mary is applying for a conventional loan with a 80% loan to value. Which of the following is a compensating factor that might justify loan approval in spite of the income ratios that are slightly higher than the normal limits?
She has strong potential for increased earnings and it advancement at work.
10-.8. A 2-1 buydown plan calls for;
The interest rate to be brought down by 2% the first year and 1% the second year.
Loan - to - value ratio-LTV
The relationship between loan amount and either the sales price for the appraised value of the property - whichever is less -, expressed as a percentage.
Buydown is
When the seller or a third-party pays the lender a lump sum at closing to lower the interest rate charge on the buyers loan.
