Loan Process, Products and Programs

Your client, Taylor, is purchasing a $100,000 home with an FHA loan and wants to put the minimum amount down on the loan. What will Taylor's down payment be?

$3,500.00

One of your clients, Barb, is using an FHA loan to purchase a home. The sales price is $200,000, and Barb wants to put down the minimum acceptable down payment for the loan. How much does she need to put down?

$7,000

Thanks to backing by Fannie Mae and Freddie Mac, conventional lenders can offer solid interest rates and allow down payments as low as ______ for qualified borrowers.

3%

The Good Neighbor Next Door program provides home buyers in certain professions up to a ______ discount on the home's purchase price.

50%

The USDA loan is intended for rural home purchases in ______ of the country.

97%

What's a purchase money mortgage?

A form of seller financing in which the seller gives the buyer a mortgage toward the purchase price.

What's a margin?

A predetermined amount that is added to the index to determine the fully indexed interest rate.

A deed of trust ______.

Allows the lender to direct the trustee to sell the property in the case of buyer default

Margin

An ARM's Fully Indexed Accrual Rate (FIAR) is the index plus the ______.

What's a mortgage insurance premium?

An amount paid by a borrower for mortgage insurance

Goes away

As of January 1, 2020, the VA loan limit ______.

A lease option combines a lease agreement with what sort of option to purchase the property?

At a future date

Has less expensive mortgage insurance

Compared to the FHA loan, the USDA loan ______.

A loan that doesn't exceed the maximum loan amount allowed for the most common mortgage investors is a ______.

Conforming loan

A ______ allows the seller to provide financing by providing credit to the buyer. The buyer makes payments directly to the seller, who retains legal title until the property is fully paid for.

Contract for deed

Upon default of a VA loan, the guarantee amount of the loan is the obligation of ______. A. FHA B. HUD C. The borrower D. The U.S. government

D. The U.S. government

Which entity directs the FHA?

Department of Housing and Urban Development

What does the DE (Direct Endorsement) program allow?

Eligible lenders to originate and close FHA loans without prior loan review by HUD

Beginning in 2020, the VA loan limit is ______.

Eliminated

Which of the following describes the amount of a VA loan that can be insured for an individual veteran?

Entitlement

For which loan is 3.5% the minimum down payment amount?

FHA

The ______ Section 203(k) programs allows a borrower to roll in the costs of rehabilitating a home into the loan.

FHA

It's true that a VA loan ______.

Has no down payment

What federal program requires lenders to cancel mortgage insurance for a borrower when their principal balance reaches 78% of the home's purchase price?

Homeowners Protection Act

A VA loan ______.

Is guaranteed by the government

What's an important feature of the FHA Section 203(k) program?

It allows buyers to borrow based on the home's value as improved, then use the amount that's the difference between sales price and loan price to rehabilitate the home.

Which of the following is true about the Federal Housing Administration?

It insures mortgages.

Your client, Kyle, wants to know when his VA loan's funding fee must be paid, what should you tell him?

It may be rolled into the loan amount, or paid at closing.

Which of the following is true about the Federal Housing Administration?

It's a division of the Department of Housing and Urban Development (HUD).

An FHA loan requires ______.

MIP for the life of the loan

Your client, Jenny, asks you about the purpose of mortgage insurance for an FHA loan. What should you tell her?

MIP offsets the risk to FHA, which insures the lender. (FHA loans require the borrower to purchase a type of mortgage insurance (MIP) that offsets the risk to FHA.)

To reduce the risk of default on a mortgage loan, especially ones that have a high loan to value ratio (usually ones over 80% loan to value), lenders may require borrowers to purchase ______.

Private Mortgage Insurance (PMI)

Clarence teaches fifth grade. You tell him that one of the benefits of the Good Neighbor Next Door program is that ______.

Qualified buyers can receive a 50% discount on a home's purchase price

She'll have to complete three more years of reserve service before she is eligible for a VA loan.

Ruby, your client, has been in the National Guard for three years and she's interested in VA's no down payment loan. Which of the following would be true for Ruby?

Is an up-front fee required in lieu of mortgage insurance

The VA funding fee ______.

What's one of the differences between an FHA loan and a VA loan?

The VA loan doesn't require mortgage insurance.

Index (An index is a published interest rate used to establish the interest rate offered on an adjustable rate mortgage (ARM).)

The ______ is a published interest rate used to establish the rate offered of an adjustable rate mortgage (ARM).

Serviceman's Readjustment Act

The ______ was passed in 1944 and established the Department of Veterans Affairs.

What are the two phases of an ARM loan?

The initial phase and the fully-indexed phase

Fixed, with a 30-year term

The standard conventional loan is ______.

Use different formulas to calculate credit scores

The three major credit bureaus ______.

Underwriting and qualification guidelines

To provide a consistent method to judge risk and default rates, which of the following does the FHA specifically set for its insured loan programs?

True or False: In 1944, at the end of World War II, Congress passed the Serviceman's Readjustment Act. One portion of the act established the Department of Veterans Affairs (VA).

True

True or False: The VA loan requires 0% down vs. 3.5% down for an FHA loan. It doesn't allow mortgage insurance to be charged to the buyer.

True

True or False: This HUD program provides housing assistance to law enforcement officers, firefighters, emergency medical technicians and K-12 teachers who buy in revitalization areas. If they qualify, buyers in these professions can receive a 50% discount on the home's purchase price.

True

Which of the following military personnel is exempt from a VA funding fee?

Veteran on disability for service-related injury

Entitlement

Which of the following describes the amount of a VA loan that can be insured for an individual veteran?

Candace a member of the National Guard, who's never seen active duty

Which of the following people is eligible for a VA loan?

More buyers would be willing to consider the home.

Which of the following would be a benefit of seller financing?

USDA (USDA loans require 0% down (FHA requires 3.5%) and have a lower mortgage insurance premium, meaning Marco's overall monthly payment would be less than it would with an FHA loan.)

Your first-time homebuyer client, Marco, has a decent credit score, but has a lower income and no money saved for a down payment. Which loan option might be a good idea for him?

Entitlement

is the amount of a VA loan that can be insured for an individual veteran.