General Mortgage Knowledge NMLS

What is a balloon Mortgage? Also known as?

A mortgage which requires the borrower to make one large payment at the end of the loan term. Also known as a "partially amortizing loans"

For a VA loan if there is a co-borrower can there income be used for qualification purposes?

A non-married co-borrower is not allowed on a VA loan unless he or she is an eligible veteran who will occupy the home.

What is a Equity Participation Mortgage(SAM)?

A participation mortgage is a type of mortgage that allows the lender to share in part of the income or resale proceeds.

If the property is sold between 91-180days after acquisition and the price increase is 100% or more of the acquisition price?

A second appraisal is required at the lender's expense.

What are USDA loans referred to as sometimes?

Section 502 loans, RD

What is a Equity Participation Mortgage also known as?

Shared appreciation Mortgage (SAM)

Loan secured by subordinate liens are referred to as?

Subordinate financing

What do VA loans cover?

The purchase of Owner-occupiedsingle-family homes or Multifamily dwellings up to four units if veteran occupies

Conforming loan limit for a four-family property?

$1,054,500

Conforming loan limit for a one family property are?

$548,250

Conforming loan limit for two family properties are?

$702,000

Conforming loan limit for a three family property is?

$848,500

An interest only mortgage is?

(straight note) Period of reduced payments, for a specified time, then payment increases to fully amortize by end of the term

What is a package mortgage?

A loan secured by real estate and in which the personal property and furniture is included in the purchase price of the house

Borrowers with less than a 580 FICO score will be required to put down at least?

10%

For USDA loans applicants must meet income requirements based on the area median income(AMI) -max ?? of the AMI?

115%

FHA mortgage payments are due?

1st and are late after the 15th of the month.

What is the funding fee for a VA loan?

2.30% of purchase price of the home.

What is max guarantee for a VA loan?

25% of purchase price or sales value

Qualifying guidelines for conventional loans generally include the following:

28% total housing expense ratio. 36% total debt‐to‐income ratio. Borrowers must qualify under both ratios. Borrowers should have 2 months of reserves. The late fee is 5% of the monthly P&I

What are the USDA debt ratios?

29/41

For salaried and hourly individuals paystubs for the most recent ?? and ?? for the most recent ??? period

30 days and W-2s. Two year period

The maximum allowable term on FHA/VA loans is?

30 years

What is the max loan term and late fee for a VA loan?

30 years and 4% of monthly P&I?

What are the FHA qualifying rations?

31% front end and 43% back end

What is max town size for a USDA loan?

35,000 people

What is the max seller concessions for a VA loan?

4%

What is maximum late charge on an FHA loan?

4% of P&I only.

What is the late fee for a USDA loan?

4% of monthly P&I

What is the max DTI for a VA loan?

41%

To qualify for the FHA's 3.5% down payment program borrowers are required to have a minimum FICO score of?

580

Sales concessions (closing cost) are limited to ?? ?

6% of the sales price

The borrower must occupy the property for an FHA loan within?

60 days after closing and plan to occupy the property for at least one (1) year.

What is a USDA loan?

A Government insured 100% purchase loan for properties in rural areas or faming properties

Conventional Loans are made by?

A bank or institutional lender (not insured or guaranteed) by a government entity.

What is a fixed home equity loan?

A closed-end, meaning that the borrower receives a lump sum and does not continue to make withdrawals

What is a blanket mortgage?

A type of loan used to fund the purchase of more than one piece of real property. They are popular with builders and developers who buy large tracts of land, then subdivide them to create many individual parcels to be gradually sold one at a time.

ARM stand for?

Adjustable Rate Mortgage

What is the construction phase of a construction loan?

An interim loan used to pay for the construction of buildings or homes. Interim financing is short‐term financing (i.e.,3‐9months.).

HUD uses mortgagee letters to?

Announce changes in policy

What is a subordinate lien?

Any mortgage or other lien that has priority lower than that of the first mortgage

What does AMI stand for?

Area Median Income

Since Conforming loans meet FannieMae/FreddieMac Standards these loans can?

Be sold on the secondary market

What are the rules regarding VA occupancy policy?

Borrower must occupy the property within 60 daysafter closing and plan to occupy the property for at least one (1) year

On an FHA loan can come from?

Borrowers own funds, gift funds or housing authority grants

USDA funds can be used to?

Build, repair, renovate, or relocate a home, or to purchase and prepare sites, including providing water and sewage facilities.

What are VA appraisals called?

Certificate of Reasonable Value (CRV) or Notice of Reasonable Value (NOV)

What are the two documents needed for VA eligibility?

Certificate of eligibility (COE) and DD214

For a VA loan two eligible veterans may?

Combine their VA Benefits to qualify for a larger loan.

What are the 2 types of conventional loans?

Conforming loans and Non-conforming

As a borrower pays off principal on a HELOC they are allowed to do what?

Continue to make withdrawls

VA loans require the originator to perform two different qualification calculations which are?

Debt-to-income ratio and residual income

USDA loans are funded by?

Department of Agriculture

In 1965 FHA became a part of what?

Department of Housing and Urban Development (HUD)

What is the COE?

Determinations of eligibility are based on the length of service and are issued

What is residual income?

Determined by residual amount of income remaining after subtracting taxes, housing expenses, and all recurring debts.

What is the DD214?

Discharge paperwork for those who have been discharged or NGB22/23 (General Orders) or Statement of Service.

What is an ARM loan?

Interest rate periodically adjusted to reflect fluctuations in cost of money

What is another name for non-conforming loans?

Jumbo Loans

What is another name for subordinate lien?

Junior Lien

Conforming Loans are loans that must meet the eligibility requirements?

Either the Federal National Mortgage Corporation (FannieMae) or the Federal Home Loan Mortgage Corporation (FreddieMac).

Jumbo loans?

Exceed the maximum loan amount established by the Federal Housing Finance Agency for Fannie Mae and Freddie Mac conforming mortgage loan limits.

What is Anti-Flip Policy?

FHA financing is not available if a borrower is purchasing a home from a seller that recently bought the property within the past 90 days and is currently reselling it

Non‐Conforming Mortgages-on the other hand, do not meet the under writing requirements established by?

Fannie Mae and Freddie Mac. Non‐Conforming loans CANNOT be sold on the secondary market.

What does FHA stand for?

Federal Housing Administration

Standards, requirements, and policies for FHA loans are compiled in?

HUD's Single Family Housing Policy Handbook (HUD Handbook 4000.1).

Is mortgage insurance required on a VA loan? What is required?

Instead of mortgage insurance, there is a one-time non-refundable variable VA funding fee that can be included in the loan.

A veteran used some entitlement on a previous purchase, and have partial entitlement available for another purchase: This is called?

Restoring entitlement

What is the main advantage of a 15 year mortgage loan?

Lenders give better interest rates

Advantages of FHA loans?

Low down payments and no prepayment penalties

The VA doesn't?

Make loans; rather, it provides a guarantee for a specific portion of the loan amount made by approved lenders.

What is a Bi-weekly mortgage?

Making a payment every two weeks is the same as making an extra mortgage payment every year because there are 26 bi‐weekly periods in a year.

FHA-Eligible Properties?

Must be one-to-four-unit owner-occupied residence

What are other names for the Dd214?

NGB22/23 (General Orders) or Statement of Service.

Do USDA loans have PMI?

No

The VA Loan Program provides veterans with an opportunity to receive a mortgage with?

No down payment and no prepayment penalty

Loans that exceed the conforming loan limit are called?

Non-conforming or jumbo loans

Borrowers with a credit score of less than 500 are?

Not eligible for FHA loans

The process of releasing the original borrower and substituting the new mortgagor is known as?

Novation

HELOCs are considered what kind of credit?

Open-ended credit

On FHA loans down payments from sellers is?

Prohibited

Individuals who own 25% or more of a business are considered to be self‐employed and are generally required to?

Provide individual tax returns

What is a Refinance/Cash-out Mortgage?

Refinancing of an existing mortgage loan, where the new mortgage loan is for a larger amount than the existing mortgage loan is for a larger amount than the existing mortgage loan, and you (the borrower) get the difference between the two loans in cash. Must have a net‐tangible benefit.

What is the completion phase of a construction loan?

The borrower must obtain permanent financing or pay the construction loan in full. The permanent loan that pays off a construction loans is a"takeout" loan.

The main disadvantage for a 15 year mortgage loan is?

The payments are generally higher due to the shorter amortization period

When is restoring entitlement allowed?

The property, securing the VA loan, has been sold and that loan has been paid in full or An eligible veteran (not disabled/not dishonored) has agreed to assume the outstanding balance on a VA loan and substitute his entitlement for the same amount originally used on the loan.

What is the front end ratio for a VA loan?

There is no requirement

Individuals earning more than 25% of their income in commission must provide?

Two years tax returns

What are the prepay penalties for USDA?

USDA does not have a prepay pentaltly

What does USDA stand for?

United States Department of Agriculture

For a VA loan can legally married, spouse's income also be considered for qualification purposes?

Yes

Can income be grossed up if it is non‐taxed income such as Social Security, public assistance or disability? If so by how much?

Yes, 25% (.125%)

Can a funding fee be waived for a VA loan?

Yes, for veterans with disabilities or surviving spouses

Are FHA loans assumable?

Yes, there is NO due on sale clause

What is the down payment requirement for FHA loans?

a 3.5% down payment based on sales price or appraisal (whichever is less)

What are B or C borrowers?

borrower who does not meet the minimum standards established by Fannie Mae/Freddie Mac classified as a B or C borrower. This might be someone who has had a credit problem in the past.

For conventional loans If a borrower does not have at least 20% down payment?

lender will normally require the purchase of private mortgage insurance(PMI)

What is an Alt-A loan?

loans made toborrowers who do not represent the high credit risk of subprime borrowers, but who not quite meet the underwriting requirements for conforming prime rate loans.

What is a bridge mortgage(Bridge loan)?

short‐term financing tool that helps purchasers to "bridge" the gap between old and new mortgages.

A fixed rate mortgage is a?

type OD mortgage loan in which the interes trate and payments (principal and interest) remain the same for the life of the loan.