principles of real estate part 3

Related to real estate financing, how much is a point?

1% of loan value

Generally, what's the common range for loan origination fees?

1% to 3%

Sellers must provide homebuyers with _______ days to conduct a risk assessment for lead-based paint or lead-based paint hazards

10

an acre is how many square feet

43,560

how many feet are in a mile

5,280 feet

Private mortgage insurance may be required on conventional loans where the loan-to-value ratio is in excess of ______%.

80%

Margot is looking for a 10-year loan with regular affordable monthly payments. In eight years, she'll inherit a good chunk of money from her grandmother and be able to pay off the remaining loan amount. What kind of loan might be best for Margot

Balloon Loan

Tyler is a developer who renovates a long-abandoned warehouse in a low-income neighborhood into a community center, complete with space for after-school programs, a daycare, and a gym. Tyler is able to complete the renovation with a loan funded by a local bank. Which act requires financial institutions to make credit available for this type of development

Community reinvestment act

Bethany has agreed to purchase Derrick's property using a land contract. Who holds legal title to the property during the term of the loan

Derrick

The equity equation formula is:

Home's appraised value - loan debt = equity

In a mortgage, the property is used as collateral for the loan. The process of pledging something as collateral is referred to as ______

Hypothecation

area formula

Length x Width

The acronym PITI is a reference to what real estate-related concept

Mortgage payment

What does PITI stand for?

Principal, Interest, Taxes, Insurance

What's the purpose of the Home Mortgage Disclosure Act

Requires financial institutions to maintain, report, and publicly disclose information about their mortgages

What do property taxes in a mortgage payment pay for

The cost of public services as a percentage of the property value

What would happen if your client's rate lock expires three days prior to closing

The interest rate will revert to the current rates

What's the purpose of the fixed/adjustable rate note?

To convert the interest rate from fixed to adjustable

How long does the borrower have to pay private mortgage insurance

Until the borrower reaches a 22% equity position

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?

a non-conforming loan

After getting into a fender bender, Parker had to buy a new car. To make the down payment on the car, he had to skip a couple of his mortgage payments. He received a notice from his lender indicating the remaining amount of his loan is due immediately and in full. What clause in his mortgage stipulates this?

acceleration

Which type of loan's interest rate fluctuates with the economic index to which it's tied

adjustable rate

The interest rate fluctuates based on the economic index to which it's tied.

adjustable rate morgage

Debt is paid off by making periodic payments toward both principal and interest.

amortized loan

Caroline's monthly mortgage payment includes principal, interest, taxes, and insurance. She has a 30-year mortgage at a consistent 3.75% interest. What type of loan does she have

budget mortgage

Which of the following is an action borrowers take to temporarily lower the interest rate on their mortgage loan?

buydown

National banks that offer consumer and business loans

commercial banks

Member-based cooperatives that provide credit for loans

credit unions

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

Shirley's lender discharged the mortgage lien on Shirley's property after processing her final payment. Which clause requires the lender to take this action

defeasence

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

discount point

Which type of point allows you to buy down your interest rate to lower your monthly payment?

discount point

Leonard is offered a loan at 5.75%. Because he plans to be in his home for several years, he chooses to pay points up front to have the rate reduced to 5.25%. What's this an example of?

discount points

Discolored soil, soft spots, or mounds on the land could be indicators of a(n) ______

former waste disposal sites

What hazard do mining activities, landfills, or agricultural pesticides contribute to

groundwater contamination

Money is loaned based on the owner's existing equity.

home equity

Companies that finance mortgage loans, but specialize in insurance products

insurance companies

Only ______ is paid until the end of a straight mortgage loan term, when the principal is repaid in full

interest

Groups that lend to those who want to avoid conventional financing

investment groups

The buyer has possession of the property, while the seller still holds the title.

land contract

the borrower holds the title & owns the house, but a promissory note signed by the borrower gives the lender the right to seize and sell the house should the borrower default

lien theory

loan origination fee equation

loan amount x loan original percentage

loan-to-value ratio equation

loan amount/home value x100

A calculation that describes the amount being borrowed compared to the value of a property is called ______ ratio.

loan to value ratio

In order to set an interest rate prior to closing, a borrower must _______ the interest rate.

lock

For 25 years, Isadora loved being her own boss, but now she's getting tired of the day in, day out tedium of running her business. She's ready to retire and move to a tropical island. She decides to sell her entire business in one fell swoop: the property together with all the equipment and furnishings. What type of loan would the buyer need to obtain

package

is essentially a promise from the borrower (the obligor) to repay a certain sum of money to another party (the lender or holder of the note, known as the obligee) under specified terms

promissory note

What type of arrangement allows the buyer to retain title to the property but places a security interest in the property on behalf of the seller?

purchase money mortgage

John recently bought a home on a few acres of land from the Rubinos. The EPA notified him that a hazardous materials site had been discovered on the outskirts of his property. After an investigation, the EPA determined that both John and the Rubinos are responsible for sharing the cost of the cleanup. What type of liability is this

retroactive

Associations that accept savings deposits and offer loans

savings and loan associations

Samuel and Yoshi have worked at the same firm for a few months and get along well. Samuel mentions he has a credit score in the low 800s. Yoshi, who's just starting out, persuades Samuel to sign for a loan to help Yoshi buy a property, since his credit isn't good enough. Yoshi promises to make the mortgage payments, but two months after the deal closes, Yoshi moves across the country. Samuel's now stuck with a $400,000 mortgage. What type of scheme is this?

straw buyer

The Clean Water Act regulates pollutants in U.S. waters and establishes quality standards for ______

surface waters

Only interest is paid until the end of the loan term, when the principal is repaid in full.

term or straight term

In a residential real estate sale involving a federally related loan, what entity is required to provide Real Estate Settlement Procedures Act disclosures to the consume

the consumers lender

When a seller and a licensee both know about an adverse material fact regarding the physical condition of a property, who bears liability for failure to disclose that fact

the seller and the licensee

the borrower receives the deed, but the lender keeps the title and owns the house until the borrower pays off the loan

title theory

Manuel is selling his home to Selena. He has an existing loan that he'll continue to make payments on, and he's extending credit to Selena for the balance of the purchase price. She will make monthly payments to him. What type of financing are the parties using in this transaction

wrap around loan

The seller continues to pay on first mortgage, while the buyer pays on this loan.

wrap-around