Text Chapter 7

The maximum guaranty and available entitlement for a VA guaranteed loan with no down payment is:

$104,250($417,000*.25)

All eligible veterans receive how much in basic entitlement?

$36,000

Current conforming loan limit for a single family home

$417,000

VA conditions for secondary financing..

1) first and second mortgages combined cannot exceed the CRV 2) borrower's income must be sufficient to qualify for both payments combined 3) the second mortgage interest rate cannot exceed the first mortgage interest rate 4) conditions on the second mortgage cannot be more stringent than on the first(but they can include a due on sale clause)

Section 203(k) requirements

1) must be able to occupy within 180 days 2) minimum repair = $5,000/maximum repair=none

Section 203(k) Streamline requirements

1) must be able to occupy within 30 days 2) minimum repair=none/maximum repair=$35,000

FHA conditions for secondary financing..

1) secondary financing can't be for minimum down payment 2) borrower's income must be sufficient to qualify for both payments combined 3) payments on second mortgage must be monthly & approximately the same amount 4) second mortgage balloon cannot be due sooner than ten years (unless approved by FHA commissioner) 5) no prepayment penalty on second mortgage

What 3 things is a variable funding fee based on?

1) veteran's status 2) # of times veteran had used the program 3) amount of any down payment

How much is the initial MIP on most FHA purchase and refinance loans?

1.00% of the loan amount with an annual premium of ye outstanding loan balance

How many days of continuous active duty for veterans who enlisted before September 7, 1980, but did not serve any part of their activity during a war make them eligible for VA loan

181

All the points discussed regarding FHA loans apply to this standard FHA loan program

203(b)

How much continuous active duty for veterans who enlisted after 9/7/80, but did not serve any active duty during a war make them eligible for VA loan

24 months

VA limits the amount it will guarantee in case of default to:

25% of purchase price

FHA requires new borrowers with a FICO score of less than___to make a down payment of at least 10%

3.5%

FHA loan requires a down payment of at least

3.5% of the home's purchase price or appraised value, whichever is less

FHA considers a borrower's income adequate for a loan if the proposed total monthly payment does not exceed.. how much of gross stable monthly income?

31%

For VA loans, the total debt service ratio can't exceed what

41%

FHA allows a maximum total debt to income ratio of..

43%

How much service in the Reserves or National Guard make them eligible for VA loan

6 years

FHA limits the amount of seller contributions that may be paid in connection with FHA insured loans to::

6%

How many days of continuous active duty for veterans who served any part of their active duty during WWII, the Korean War, Vietnam, or Persian Gulf War make them eligible for VA loan

90

What is the FHA maximum LTV for a home over $50,000?

96.5%

What is the worst scenario for a borrower with an FHA ARM?

A 1% increase in interest each year for 5 years to the maximum 5% increase, then no decline in rate for the life of loan

VA regulations allow which items to be paid by the seller?

Any

For no down payment loans, most lenders require that the VA loan guarantee equal..

At least 25% of the loan amount

If the initial MIP premium for 15 year or 30 year loans is paid in cash at closing, it may be paid by:

Buyer, seller, or by any third party(ie relative)

How is the VA bonus entitlement calculated?

By taking the annual Freddie Mac conforming loan limit for single family homes by county, multiplying it by 25% & then subtracting the $36,000 of basic entitlement

COE

Certificate of Eligibility -- required by lender to establish the amount and status of the veteran's eligibility under the VA program

What is the main criterion for a property being approved for a VA loan?

Certificate of Reasonable Value(CRV)

CRV

Certificate of Reasonable Value-- states the value of the property based on an approved appraisal

Lenders authorized to underwrite their own FHA loan applications

Direct Endorsers

DD-214

Discharge Papers or Report of Separation-- required documentation for a veteran to obtain a VA loan

How do you determine how much stable monthly income is required?

Divide Total Housing Expense by 31%

VA maximum guarantee amount, which determines how much guarantee assistance a veteran can get on a VA loan

Entitlement

Adjustments to contract interest rate ate limited to 1% annually under what

FHA ARM

The interest rate can't be increased or decreased more than 5% during the life of the loan under what?

FHA ARM

What is the main difference between FHA loans and conventional loans?

FHA loans have more liberal income qualifying standards

Loans under the authority of the Department of Housing and Urban Development(HUD)

FHA-insured loans

FHA

Federal Housing Administration It's a large federal mortgage insurance agency

What is the VA's main purpose?

Guaranteeing loans to help meet the housing needs of eligible veterans who have served this country

When can Financed MIP be cancelled?

It can't be cancelled

FHA regulations as of summer 2010 require new borrowers with a FICO score less than ____ to make a down payment of at least 10%

Less than 580

MIP

Mortgage Insurance Premium Equivalent of PMI for Conventional Required for all FHA loans

How do you determine the maximum monthly housing expense the borrower can afford

Multiply borrower's stable monthly income by the housing expense ratio

When FHA insures private lenders against losses caused by borrower defaults on FHA-insured loans

Mutual Mortgage Insurance Fund(MMI)

Is negative amortization permitted with an FHA ARM?

No

For USDA loans, how much mortgage insurance is required for 100% financing?

None

How much in of closing costs can be financed for a VA loan

None

What is the limit for how much a seller can pay in discount points?

None

For loans made after 1/1/01, the MIP is automatically cancelled when the LTV..

Reaches 78% of the original loan value

The amount of income remaining after subtracting taxes, housing expenses, and all recurring debts and obligations

Residual income

Loans under the authority of the US Department of Agriculture(USDA)

Rural Development guaranteed and direct loans

FHA insured loan allows buyer to buy property and borrow extra money to repair it

Section 203(k) - rehabilitation loan

This FHA-insured loan is available on qualified condominiums

Section 234(c)

FHA-insured ARMs fall under

Section 251 ARM

USDA Loans for single family homes that either guarantee loans made by private lenders or makes direct loans if no local lender is available

Section 502 loans

What establishes the maximum mortgage amount a veteran may have on a VA-guaranteed loan?

The CRV or the sales price, whichever is less

FHA is a part of

The Department of Housing and Urban Development(HUD)

Who is the only person that can co-sign a VA loan?

The veteran's spouse

Applicants for section 502 guaranteed loans may have an income of up to..

Up to 115% of the area median income(AMI)

Seller is limited to paying up to how much for closing costs in a VA loan?

Up to 4%

Lenders authorized to underwrite their own VA loan applications on behalf of the VA

VA automatic endorsers

Loans guaranteed by the federal government through the Veterans Benefits Administration

VA-guaranteed loans

Loans under the authority of the Department of Veterans Affairs

VA-guaranteed loans

What does VA charge at closing for guaranteeing loan?

Variable Funding Fee-- No monthly mortgage insurance

Applicants for Section 502 Direct Loans must have..

Very low(below 50% AMI) or low(between 50% and 80% of AMI) incomes

What is one of the easiest ways for a VA loan underwriter to justify approving a loan with the total debt service ratio exceeding 41%

When a borrower's residual income is at least 20% above the minimum