Finance

Mark gets a home loan and the lender will charge him 3 points at closing. If the loan is for $68,000, what will Mark be assessed in points?

$2,040

What is the maximum conforming mortgage limit for single-family homes as of 2018?

$453,100

What is another term used to describe a promissory note?

Bond

blanket loan

Covers more than one piece of property.

What is the maximum conforming loan amount for a 2-unit property as of 2018?

$580,150

What is the maximum conforming loan limit for a 3-unit property as of 2018?

$701,250

Regulation Z applies to?

$75,000 condominium loan

What is the maximum conforming loan amount limit for a 4-unit property?

$871,450

The loan origination fee on a VA loan cannot exceed:

1 percent of the loan amount.

What was the minimum down payment required for a conventional mortgage as of 2018?

3%

What was the maximum allowable debt-to-income ratios for conforming loans as of 2018?

50%

Any loan that exceeds the conforming loan limits set by Fannie Mae and Freddie Mac is called what?

A "jumbo" loan

Greg and Joyce purchased a home from the builder who offered to pay $5,000 at closing as an incentive to get them to buy. What kind of mortgage will they get?

A buydown mortgage.

What is a balloon mortgage?

A loan that has one large final payment due when the loan matures

Which loans usually require private mortgage insurance (PMI) at certain higher loan-to-value amounts?

Conforming residential loans

Which loan covers the period of time between the end of one mortgage and the beginning of another?

Bridge

What type of loan is often used when a seller will not accept a property sale contingency?

Bridge Loan

Inflation

Can be caused by either too few goods offered for sale or too much money in circulation

What is the clause that requires the borrower to pay off the entire mortgage debt when the property is sold?

Due-on-sale or alienation clause.

Name 3 Major credit reporting agencies

Equifax Experian TransUnion

Which organization insures loans made by approved lending institutions?

FHA

Ginnie Mae and Fannie Mae were created to deal primarily with what loans?

FHA and VA

Who is not a major player in the secondary mortgage market? Fannie Mac Ginnie Mae Fannie Mae Freddie Mac

Fannie Mac

Which secondary market investor has purchased the most residential loans in their history?

Fannie Mae

______________ is a shareholder-owned company that works to make sure mortgage money is available for people across the country.

Fannie Mae

PMI loans made after July 1999 are now regulated by Federal law. What is this law called?

Homeowners Protection Act

Ruth must deposit $1,113.45 in to a FHA-backed escrow account. This is known as what type of account?

Impound Account

Right to rescind

In most cases, the borrower has a right to cancel the transaction by notifying the lender within 3 days. This does not apply to residential first mortgage loans, but does apply to refinancing and home equity loans.

What is the interest rate on an ARM tied to?

Index

What is a Certificate of Reasonable Value and what is it used for?

It shows the value of a property in relation to its sales price. It is issued by an approved VA appraiser when a veteran is seeking a DVA loan.

In the event of default by the purchaser, the lender has the right to bring legal action through the courts to satisfy the debt. This is called by what name?

Judicial Foreclosure

Al is seeking an FHA loan. Where would he NOT go to make an application?

Local HUD Office

What is the maximum conforming loan limit for a 5-unit property as of 2018?

Not available

Who would probably NOT be targeted by predatory lenders?

People with "A" paper

Which mortgage clause requires the borrower to maintain the physical condition of the property?

Preservation and Maintenance of Property

Buyer Rich has asked Seller Sally to hold $15,000 as a second mortgage. What type of mortgage is Rich requesting?

Purchase Money Mortgage

Seller James has taken back $20,000 as a second mortgage so Buyer Karl can qualify to buy the property. The $20,000 is what type of mortgage?

Purchase Money Mortgage

Which of the following is a low loan-to-value ratio? Jake is getting a VA loan with no down payment. Sandy and Bill are putting 30% down on their home purchase. Alice is getting a conventional loan and making a 15% down payment. Tim and Gail have qualified for an FHA loan.

Sandy and Bill are putting 30% down on their home purchase.

Jim has a loan where the entire payment amount goes to the interest owed? What type of loan does Jim hold?

Straight

What are the most common loan types?

Straight (Interest-only) Amortized Balloon payment Adjustable-rate

What are the 3 mortgage backed securities in Ginnie Mae

Straightedges pass-through modified pass-through fully modified pass-through

n which type of loan is the payment allocated only to interest?

Term mortgage

What is not a common way that mortgage funds are shifted? Lenders selling loans to one another. Through mortgage-backed securities The Federal Reserve purchasing mortgages from smaller member banks. One institution selling a part interest in a block of loans to another institution.

The Federal Reserve purchasing mortgages from smaller member banks.

Why is the borrower's net worth significant to the lender?

The borrower's net worth indicates ability to keep up with loan's payments if the borrower loses their job.

In what type of mortgage-backed security does the security holder receive payment of both principal and interest, whether or not is has been collected?

The fully modified pass-through security

Which of the following is not true about reverse annuity mortgages? The lender makes payments to the borrower. This mortgage type is popular among the elderly. The borrower pays a fixed rate of interest. The loan must be repaid before the borrower's death.

The loan must be repaid before the borrower's death.

Which of the following is NOT an FHA loan requirement? The borrower must occupy the property. There must be evidence that a structural inspection has shown no evidence of pest infestation. The maximum purchase price of the property cannot exceed $250,000. The real estate must be appraised by an approved FHA appraiser.

The maximum purchase price of the property cannot exceed $250,000.

Straight or term mortgage, also called an interest-only loan

The monthly payments are allocated only to interest. No principal is paid off.

True or false Fannie Mae receives no government funding

True

Define a purchase money mortgage.

With a purchase money mortgage, the buyer borrows from the seller in addition to the lender. This is sometimes done when a buyer cannot qualify for a bank loan for the full amount; so the seller "takes back" a portion of the purchase price as a second mortgage.

Describe a reverse annuity mortgage.

With this type of mortgage, the lender makes payments to the borrower. This system allows older property owners to receive regular monthly payments from the equity in their paid-off property without having to sell.

Fred has an existing property mortgage, but seeks a second loan. What type of loan might help Fred?

Wraparound Loan

Steve has an existing loan with Sunray Bank and has applied for a second loan. He does not have to pay off his existing mortgage in order to qualify. What type of loan is Steve getting?

Wraparound Loan

amortization plan

a borrower makes a periodic (usually monthly) payment of principal plus interest. These payments result in the loan being paid off gradually over time. usually fixed-interest, long-term loans of 15 or 30 years.

Ginnie Mae

a division within HUD (department of housing and urban development) that guarantees that monthly payments will be made every month

An index is

a measure of economic conditions

a wraparound mortgage

allows a borrower who has an existing loan to get another loan from a second lender without paying off the first loan

A blanket loan usually includes a partial release clause. What is it?

allows borrowers to obtain a release of any individual lot from the lien by repaying a certain part of the loan

open-end loan

an expandable loan which gives a borrower a limit up to which he or she may borrow.

Net worth

an indication of borrowers ability to keep up the payments on the loan in the event that the borrower would lose his or her job

Freddie Mac

buys conventional loans from savings banks, commercial banks and mortgage companies, assembles loans into a pool of mortgages and issues a security backed by mortgages

A blanket mortgage:

covers more than one piece of property.

the interest rate on an open-end loan is

fixed

An interest-only loan might be a good choice:

for a buyer who plans to own the property for a short time and believes the property will appreciate during that time.

when is a wraparound loan generally used?

in a refinancing situation or for the purchase of a home when a beer cannot prepay the existing mortgage

Payment cap

insures a set monthly payment that remains the same although the actual interest rate may fluctuate throughout the year

a shared equity mortgage

is a form of participation mortgage in which the lender shares in the appreciation of a mortgaged property if and when the property sells

A lender encourages a borrower to refinance a loan so that the lender can charge high points and fees for the new loan. This is called:

loan flipping.

Fannie Mae

makes sure mortgage money is available to people across the country.

adjustable rate mortgages are more ideal fo people who

only intend to own the property for a short period of time

Balloon payments are also called what?

partially amortized loans

Ginnie Mae I

payments are made to holders on the 15 of each month. Minimum pool size is 1 million

Fixed-rate fully-amortized loans:

provide a fixed interest rate for the life of the loan.

what can homeowners use a home equity loan for?

purchasing high dollar items taking a vaation consolidating other loans or CC debt paying medical expenses paying college tuition making home improvements

Regulation Z

requires lenders to disclose to buyers the true cost of obtaining credit, so that borrowers can compare the costs of various lenders

fully amortized loan

same payment every month. payment first goes to interest then to the principal

Loans originated in the primary mortgage market can be bought, sold or traded in the:

secondary mortgage market.

The Truth in Lending Act exists:

so lenders disclose to buyers the true cost of obtaining credit.

Borrowers who fall into the "below A" categories are referred to as:

sub-prime borrowers.

The index plus the margin establishes what?

the calculated rate or note rate

In a reverse annuity mortgage

the lender is making payments to the borrower

Conventional loans are typically uninsured. This means that

the mortgage itself provides the only security for the loan.

negative amortization cap

this cap limits the amount of unpaid interest that the lender can actually add to the principal balance

sale-leaseback arrangement

typically used by commercial enterprises to free up money that has been tied up in. the real estate to use as working capital and business owner sells the property then leases it back from the buyer

Loan flipping is:

when a lender encourages a borrower to refinance a loan so that they can charge high points and fees for the new loan.

in a land contract when does the buyer receive legal title?

when he final payment is made