Section 4 Review

G.I. Joe retires from the Army and gets his certificate of eligibility for a VA loan. Joe makes an offer to purchase a home for $200,000. The CRV gives an indicated value of $190,000. If the seller will not reduce the price and Joe wants to buy the house anyway, what down payment will be required from Joe?

$10,000.

A mortgage loan which provides for payment of the total principal amount of the loan at the maturity date would be referred to as a

Term loan

An interest rate that is charged on a loan that is higher than the legal limit violates which of the following laws? Select one: a. Statute of Frauds. b. Usury. c. Regulation Z. d. Fair Housing.

Usury

A mortgage clause that states that the mortgage is due and payable upon certain conditions, such as non-payment is: Select one: a. Prepayment. b. Subordination. c. Defeasance. d. Acceleration.

d. Acceleration.

If a veteran has an existing VA loan, under which of the following circumstances could he or she obtain another VA loan? Select one: a. If the first loan has been paid in full and the property sold. b. If the first loan is assumed by a qualified veteran buyer and the buyer's eligibility is substituted for the seller's. c. If the first loan is more than 5 years old. d. Either the earlier loan was fully repaid or assumed by another veteran with a substitution of eligibility.

d. Either the earlier loan was fully repaid or assumed by another veteran with a substitution of eligibility.

A lender advertises 80% LTV conventional loans. 80% is applied to: Select one: a. Appraised value b. Selling price c. The buyers income d. The purchase price or appraised value, whichever is lower

d. The purchase price or appraised value, whichever is lower

Why do people avoid balloon mortgages?

Because of the large lump sum payment that must be made when due.

A lender has been accused of violating a state's usury laws. This accusation would necessarily involve:

Charging excessive interest rates.

Which of the following types of loans might require private mortgage insurance? Select one: a. Conventional loans only. b. FHA loans only. c. Both conventional and FHA loans. d. VA loans only.

Conventional loans only.

The difference between the value of property and any debt directly related with that property is described as:

Equity

Brian has a mortgage and is paying 11% interest on the note. He obtains a new loan with an interest rate of 10% and pays off the old loan. This process is known as:

Refinancing

A lender adds some additional charges to the monthly payment for the reserve or escrow account. The purpose of this charge is to: Select one: a. Increase the interest yield to the lender. b. Create a buffer in case the borrower misses a payment. c. Comply with the Real Estate Settlement Procedures Act. d. To ensure payment of property taxes and insurance.

To ensure payment of property taxes and insurance.

The primary function of the FHA is to:

To insure lenders against default by a borrower.

A budget mortgage payment (PITI), would not normally include: Select one: a. A payment toward the principal of the loan. b. A payment toward the interest on the loan. c. 1/12 of the annual real property taxes. d. 1/12 of the annual life insurance premium.

d. 1/12 of the annual life insurance premium.

Which of the following type of loan will have an interest rate that will change? Select one: a. VA b. FHA c. GRM d. ARM

d. ARM

When buying a home with a VA loan, the buyer: Select one: a. Could pay more than the appraised value. b. May borrow the money needed for the down payment from a relative. c. Does not need to occupy the property. d. Must be at least 21 years of age.

a. Could pay more than the appraised value.

A house with an outdated kitchen suffers from? Select one: a. functional obsolescence. b. economic obsolescence. c. physical deterioration. d. economic devaluation.

a. functional obsolescence.

FHA's role in the real estate mortgage market is best described as: Select one: a. A lender to the consumer. b. An insurance company. c. A secondary mortgage market warehouse. d. A mortgage banker.

b. An insurance company.

The maximum interest rate that can be charged for a home mortgage is determined by which of the following? Select one: a. FDIC. b. State usury laws. c. Federal Home Loan Bank Board. d. Federal Reserve.

b. State usury laws.

A lender has conducted a foreclosure sale after a loan default but the sale proceeds were insufficient to repay the debt. The lender gets a judgment from the court ordering the borrower to repay the remaining loan balance. This is an example of a(n): Select one: a. Insufficiency order. b. Specific lien. c. Deficiency judgment. d. Repayment judgment.

c. Deficiency judgment.

The truth-in-lending law requires full disclosure of financing terms when certain "trigger" terms are used in ads. Which of the following is NOT considered to be a financing term? Select one: a. The APR (annual percentage rate) of the loan. b. Down payment required. c. Miscellaneous closing costs. d. The number, amount and frequency of payments.

c. Miscellaneous closing costs.

The most important factor influencing the value of real estate is?

location of property

A mortgage lien is released by a

satisfaction

The truth-in-Lending Act would not apply to a loan for? Select one: a. the purchase of a vacant lot on which a single-family residence will be constructed. b. the purchase of a $20,000 farm. c. the purchase of a family-owned jewelry store. d. the purchase of a $250,000 residence.

the purchase of a family-owned jewelry store.