(Ch. 3) Texas Principles of Real Estate Part 2
XYZ Bank is willing to offer a 80% LTV loan on a property. If the property was appraised at $160,000, and the contract price is $180,000, what will be the loan amount offered by XYZ Bank...?
$128,000
If an owner obtained a $100,000 loan on a $200,000 property, what LTV was provided by the lender...?
50% (percent)
If an owner obtained an $80,000 loan on a $100,000 property, what LTV was provided by the lender...?
80% (percent)
Mortgage Broker
A broker who arranges a mortgage loan between a lender and a borrower for a fee.
Real Estate Settlement Procedures Act (RESPA)
A federal law requiring the disclosure to borrowers of settlement (closing) procedures and costs by means of a pamphlet and forms prescribed by the United States Department of Housing and Urban Development.
Sale and Leaseback
A financial arrangement where at the time of sale the seller retains occupancy by concurrently agreeing to lease the property from the purchaser. The seller receives cash while the buyer is assured a tenant and a fixed return on buyer's investment.
Home Equity Loan
A loan against the equity in a home.
Construction Loan
A loan made to finance the actual construction or improvement on land. Funds are usually dispersed in increments as the construction progresses.
VA Loan
A loan made to qualified veterans for the purchase of real property wherein the Department of Veteran's Affairs guarantees the lender payment of the mortgage.
Balloon Mortgage
A mortgage in which the scheduled payment will not amortize the loan over the mortgage term; therefore, for the debt to be fully satisfied, a final payment called a balloon payment, larger than the uniform payments, is required.
Adjustable Rate Mortgage (ARM)
A mortgage loan which bears interest at a rate subject to change during the term of the loan, predetermined or otherwise.
Conventional Loan
A mortgage securing a loan made by investors without governmental underwriting, i.e., which is not FHA insured or VA guaranteed. The type customarily made by a bank or savings and loan association.
Freddie Mac
A nickname for the Federal Home Loan Mortgage Corporation (FHLMC), a corporation wholly owned by the Federal Home Loan Bank System that purchases FHA, VA, and Conventional mortgages.
Ginnie Mae
A nickname for the Government National Mortgage Association (GNMA), a U.S. government agency that purchases FHA and VA mortgages.
Creditor
A person to whom a debt is owed.
Mortgage Banker
A person whose principal business in the originating, financing, closing, selling and servicing of loans secured by the real property for institutional lenders on a contractual basis.
Which of the following is a source of real estate financing...? Local banks Mortgage banking companies Credit unions All of the above
All of the above
PITI
An acronym denoting that a mortgage payment includes principal, interest, taxes, and insurance.
A written notice of an obligation given by a corporation or government entity is known as a...?
Bond
A loan made to finance the actual construction or improvement on land is referred to as a...?
Construction loan
A mortgage securing a loan made by investors without governmental underwriting is referred to as a/an...?
Conventional loan
A person to whom a debt is owed is known as a...?
Creditor
The minimum interest rate set by the Federal Reserve for lending to other banks is known as the...?
Discount rate
Which of the following is a privately owned corporation that purchases FHA, VA, and conventional mortgages...?
Fannie Mae
The U.S Central bank is known as the...?
Federal Reserve System
In this type of loan, a borrower initially pays a reduced interest rate, which gradually increases to the market rate after a period of time...?
Flexible payment loan
Negative amortization may occur in which of the following types of loans...?
Flexible payment loan
Most deed of trust loans are...?
Fully amortized
A loan against the equity in a home is known as a...?
Home equity loan
Which of the following will most likely benefit from a balloon mortgage...?
Homebuyers who only intend to live in the property for a few years
A monthly mortgage payment primarily consists of which of the following in the early stages of the loan...?
Interest
A broker who arranges a mortgage loan between a lender and a borrower for a fee is referred to as a...?
Mortgage broker
This occurs when monthly installment payments are insufficient to pay the interest accruing on the principal balance, so that the unpaid interest must be added to the principal due...?
Negative amortization
Negative Amortization
Occurs when monthly installment payments are insufficient to pay the interest accruing on the principal balance, so that the unpaid interest must be added to the principal due.
The Federal Reserve regulates the flow of money and interest rates indirectly by controlling which of the following requirements for its member banks...? Credit requirements Reserve requirements Minimum loan requirements All of the above
Reserve requirements
The primary function of a .......... is to promote thrift and home ownership?
S&L
A mortgage payment includes principal, interest, insurance, and...?
Taxes
A mortgage that requires the mortgagor to pay interest only during the mortgage term, with the principal due at the end of the term is referred to as what type of mortgage...?
Term mortgage
Primary Mortgage Market
The activity of lenders' making mortgage loans to individual borrowers.
Discount Points
The amount of money the borrower or seller must pay the lender to get a mortgage at a stated interest rate. The amount is equal to the difference between the principal balance on the note and the lesser amount which a purchaser of the note would pay the original lender for it under market conditions. A point equals one percent of the loan.
Federal Reserve System
The federal banking system of the United States under the control of central board of governors (Federal Reserve System) involving a central bank in each of twelve geographical districts with broad powers in controlling credit and the amount of money in circulation.
Yield
The interest earned by a bank on the money it has loaned.
Discount Rate
The minimum interest rate set by the Federal Reserve for lending to other banks.
Truth in Lending
The name given to the federal statutes and regulations (Regulation Z) which are designed primarily to insure that prospective borrowers and purchasers on credit receive credit cost information before entering into a transaction.
Loan to Value Ratio
The relationship between the amount of a mortgage loan and the lender's opinion of the value of property pledged to secure payment of the loan.
Annual Percentage Rate
The relative cost of credit as determined in accordance with Regulation Z of the Board of Governors of the Federal Reserve System for implementing the Federal Truth in Lending Act.
Fannie Mae
The shortened name for the Federal National Mortgage Association (FNMA), a privately owned corporation that purchases FHA, VA, and conventional mortgages.
Bond
Written notice of an obligation given by a corporation or government entity. A surety instrument.
The interest earned by a bank on the money it has loaned is referred to as...?
Yield
Which of the following terms will have the largest monthly mortgage payment...? 10 year loan 15 year loan 20 year loan 30 year loan
10 year loan
The Federal Reserve System is divided into how many geographical districts....?
12
What is required to fully satisfy a balloon mortgage...?
A balloon payment
Wrap Around Mortgage
A financing device whereby a lender assumes payments on existing trust deeds of a borrower and takes from the borrower a junior trust deed with a face value in an amount equal to the amount outstanding on the old trust deed and the additional amount of money borrowed.
Term Mortgage
A mortgage that requires the mortgagor to pay interest only during the mortgage term, with the principal due at the end of the term.
A term loan is typically used for which of the following...? Second mortgages Home improvement loans Investor loans All of the above
All of the above
Which of the followed is asked on a residential loan application...? Employment history Current monthly housing expenses List of assets and liabilities All of the above
All of the above
Which of the following is the riskiest loan for a residential borrower...?
Balloon mortgage
Subsidy Buydown
Funds provided usually by the builder or seller to temporarily reduce the borrower's monthly principal and interest payment.
Which of the following is a U.S. government agency that purchases FHA and VA mortgages...? HUD Department of Housing and Community Affairs Ginnie Mae Department of Finance
Ginnie Mae
A mortgage payment includes principal, interest, taxes, and...?
Insurance payments
The financing charge that a lender requires is referred to as the...?
Loan origination fee
The relationship between the amount of a mortgage loan and the lender's opinion of the value of property pledged to secure payment of the loan is known as the...?
Loan to value ratio
A person whose principal business is the originating, financing, closing, selling and servicing of loans secured by the real property for institutional lenders on a contractual basis is referred to as a...?
Mortgage banker
Private Mortgage Insurance
Mortgage guaranty insurance available to conventional lenders on the first, high risk portion of a loan (PMI).
A lender will most likely provide a higher LTV for which of the following property types...?
Primary residence
Mortgage guaranty insurance available to conventional lenders on the first, high risk portion of a loan is referred to as...?
Private mortgage insurance
A financial arrangement where at the time of sale the seller retains occupancy by concurrently agreeing to lease the property from the purchaser is known as...?
Sale and leaseback
Once a bank make a loan to a borrower, the bank may sell that loan in which of the following markets...? Secondary mortgage market Primary mortgage market Trading market Stock market
Secondary mortgage market
The Texas Department of Housing and Community Affairs offers which of the following mortgage and housing assistance programs...? The Texas First-Time Homebuyers Program The Texas Bootstrap Loan Program Veterans Housing Assistance Program All of the above
The Texas First-Time Homebuyers Program
Secondary Mortgage Market
The buying and selling of existing deeds of trust and promissory notes.
Loan Origination Fee
The financing charge that a lender requires.
Lenders base their LTV ratio on which of the following...?
The lesser of the appraised value or the contract price
Lenders base their LTV ratio on which of the following...? The lesser of the appraised value or the contract price The greater of the appraised value or the contract price The appraised value only The contract price only
The lesser of the appraised value or the contract price
The Fannie Mae form 1003 is also known as the...?
Uniform Residential Loan Application
