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