Finance of Real Estate
The veteran on a VA loan pays how much of a down payment?
$0
an appraiser find on average that rental homes in the area are selling for 165,000, avg rents are 1,500 a month. The appraiser is appraising the home with a projected growth rate of 1,450 a month. What is the value of the home using the gross rent multiplier?
$159,500
Major loan reforms spearheaded by the FHA have included.
-fully amortized loans -downpayment as low as 3.5% -low interest rate -mandatory collection of taxes and hazard insurance premiums in an escrow account -guidelines for borrower qualifications
1 point =
1% of the loan amount
There are TWO advantages to FHA loans:
1). qualifying ratios are more lenient allowing borrowers to have more debt and still qualify 2). LTVs are very high, allowing buyers with little money for a down payment to purchase a property
the term house payment typically includes a monthly payment of ____ of annual taxes, homeowners insurance and mortgage insurance
1/12
Federal Home Loan Mortgage Corporation (FHLMC)
1970's purchase; "Freddie Mac" is a wholly owned subsidiary of the Federal Home Loan Bank System, which serves as a secondary mortgage market for savings and loan associations, who are members of the FHLBB; also referred to as The Mortgage Corporation.
the creditor must ensure that the consumer receives the Closing Disclosure form at least ___ business days before the consumer closes the loan
3 days
a lender qualifying a borrower on a 36 % ratio which includes house payment regular monthly obligation. The borrower has a gross monthly income of 8,200 per month. Debt obligation of 1,300 per month. what is the max monthly payment in which the borrower can apply for?
8200 * .36=$2,952. cannot exceed 1,300
the max loan-to-value ratio on an FHA loan is
96.5%
if the market time in an appraisal is over 6 months, is it not an issue it indicates a healthy market?
????
the subordination clause
A clause in which the holder of a mortgage permits a subsequent mortgage to take priority. Subordination is the act of yielding priority.
lifting clause
A clause which gives the borrower the ability to replace the primary instrument with another without affecting the subordinate instrument's position.
UFMIP (up-front mortgage insurance premium)
A one time charge by the FHA for insuring a loan. Can be paid at closing or added to the loan at funding
escrows are required for ____ transactions regardless of Loan-to-Value LTV ratio
ALL
initial adjustment cap
ARMs that offer a fixed rate period during the first years of the loan usually have an initial rate cap that is higher than the per adjustment cap
a significant federal law that affects lenders. this federal law was passed to ensure that banks would serve the needs of the community as they were chartered to do business.
CRA (COMMUNITY REINVESTMENT ACT)
what is fully executed when the final loan payment is made?
Contract for Deed; the seller (vendor) sells delivers the deed to the vendee (buyer)
three major national credit reporting agencies
Experian, Equifax, Transunion
to participate in the texas veterans loan program what do veterans needs to obtain?
FHA, VA, or conventional loan from a participating lender
All residential mortgage loan originators must now be registered with:
Nationwide Mortgage Licensing system and registry (NMLSR)
TDHCA
Texas Department of Housing and Community Affairs
the sales comparison approach
The process of estimating the value of a property by examining and comparing actual sales of comparable properties.
ad valorem (according to value)
a property tax is an ad valorem tax
A lien is
a right given by law to certain creditors to have debts paid out by the property of a defaulting debtor, usually through a court sale
TDHCA is the agency responsible for
affordable housing, house-related and community service programs, and the regulation of the states manufactured housing industry
after the contract for transaction, when does one receive title to the property?
after the final loan payment
power of sale
aka statutory foreclosure is allowed by many states if the mortgage includes a power of sales clause
Escrow of taxes and insurance is required for FHA loans:
always on fha loans
in an ________ loan, the monthly payments includes an amount that is applied first to the interest that is due, with the remainder of the loan payment being applied to the outstanding loan balance (known as principal balance)
amortizing
a second mortgage (or second deed or trust) is
an instrument subordinate to the primary mortgage
a buyer interested in buying a home today, interest rates are forecasted to go down in the next four months, what type of loan should he secure now to take advantage of the declining rate of the future?
arm loan
a portfolio loan is an a. FHA loan sold to the secondary market b. a loan not sold into the secondary market but retained by the lender c. conventional loan sold by freddie mac d. a construction to permanent loan
b. a loan not sold into the secondary market but retained by the lender
which of the following capa loans most liekly contains a release claus?
blanket mortgage
In an ARM, the index: (a) Is controlled by the lender (b) Is controlled by the borrower (c) Varies with fluctuations in financial markets (d) Is chosen by the lender on the adjustment date
c) varies with fluctuations in financial markets
a home was built 30 years ago, 30 years is the home's a. peaceful life b. effective age c. chronological age d. depreciating age
c. chronological age
the state of texas plays a role through affordable housing through the a. texas secretary of state b. TREC c. Texas department of community affairs d. RR commission
c. texas department of community affairs
front ratio
computed by dividing the total monthly payments (which include interest and principal on the loan plus property taxes and homeowner insurance) by the applicant's pre-tax monthly income
which of the following properties would be eligible for a VA loan? a. apartment complex b. condominium c. timeshare
condo
a blanket mortgage
covers more than one piece of property. a builder may buy more than one lot in a subdivision, he will do so with one loan. this type of loan is likely to contain a release clause, allowing the borrower to obtain partial leases of specific lots by making required lump sum payments
an appropriate loan for a property in need of significant rehab would be a: a. construction loan b. cash back c. permanent d. construction to permanent
d. construction to permanent
when a property is foreclosed and sold at auction for less than it's owed on the market, the lender may seek a ______ for the unpaid balance
defeciency judgement
Any excess money left over from the forced sale is given to the debtor. In the event of a shortage, the lender may sue the borrower for a __________________
deficiency judgment
the buyer must actually have the funds of the _______ on hand. The source of this payment cannot be used with the loan
downpayment
how is the veteran able to obtain a VA loan
eligibility
a claim, lien, charge, or liability attached to and binding real property is otherwise known as
encumbrance
the index and resulting rate move up and down with fluctuations in the
financial market
If a borrower is in default, the mortgage servicer may start the _________ process. (a) Forestalling (b) Closing (c) Casting (d) Foreclosure
foreclosure
what was established in the 1970 for the purpose of purchasing mortgages in the secondary market?
freddy
during a foreclosure, the borrower may also be responsible for paying a defeciency judgment which is the difference between what is owed on the mortgage and the price the
home sells for at foreclosure auction
in an adjustable rate mortgage, the loan is funded at a rate for a certain period of time. Rate changes in an ARM are determined by
increases and decreases in a funds index that is not under control of a lender
fixed rate charge on an adjusted rate mortgage until first adjustment made is known as
initial rate
collateral
is something of value that can be pledged as security for repayment of loan
the loan-to-value ratio
is the percentage of the lesser appraised value or sales price for that lender will lend
in a ______ foreclosure the lender files a suit with the judicial system
judicial
In regards to lenders under FHA, they bear _____ risk bc FHA will pay claim to the lender in the event of homeowners default
limited
while a majority of commercial banks today participate in _____ lending, this is not always the case
mortgage
the process of creating a new mortgage loan, including all steps taken by a lender to attract and qualify a borrower is
mortgage lending activities; ORIGINATION
the borrower is known as the mortgag___
mortgagor
_____ bonds are sold by government entities to fund major capitol investments
municipal
federal fair housing statutes prohibit housing discrimination based on which of the following
national origin, sex, religion, disabilites, race, families with children
gift funds cannot be cash on hand related or be from a
party related to the transaction (real estate agent, sales agent, broker, seller)
a marketing time over 6 months can be
problematic and create a drag in property values
a buyers unconditional promise to repay and includes the amount borrowed, payment amount, due date and rate of interest is
promissory note
eligible veterans may obtain loans to
purchase a condo
Community Reinvestment Act prohibits
redlining
a young couple with a high credit score would like to buy a run down house in a high risk neighborhood. the lender refuses to lend in that neighborhood, the lender is guilty of
redlining
redlining is what
refusing to provide financing in a particular area because of the location
primary market lenders provide cash for someone seeking mortgage, examples include
savings and loans, commercial banks, mutual savings bank, mortgage companies, credit unions, individuals
FHA has _____ influence on real estate
significant
FHA provides mortgage insurance to
single family homes, multifamily, manufactured homes
eligible borrowers under the texas land board?? housing assistant programs include a. disabled veterans b. veterans born in texas c. all honorably and dishonorably discharged d. surviving spouses
surviving spouses
a borrower under the deed of trust defaulted on a loan, forclosure sale was held on a residential property in, the proceeds of the sale exceeded the outstanding debt by 5,000, who gets the power of the 5,000?
the borrower
what is underwriting
the detailed process that a lender takes in evaluating a borrowers loan application to determine the risk involved for the lender
the primary market
the market where borrowers and mortgage lenders come together to create and negotiate terms of a mortgage transaction
which of the following contains borrowers personal promise to repay?
the note
market value
the price at which property would sell
____ and _____ members and their spouses may receive up to $424,100 on a fixed-rate loan for 15, 20, 25, or 30 year terms?
veterans and military