Champions Real Estate Finance (Exam Review)Rated 100% Correct!!VA Loan Requirements - Answer - must be honorably discharged
- must meet service requirements
- time frame of service; number of days active duty
- must obtain certificate of eligibility (COE)
Loan Terminology - origination, funding, underwriting, servicing - Answer 1) Origination - process of creating a new mortgage loan; includes steps to attract and qualify a borrower 2) Funding - process of transferring funds to a title or escrow company for disbursement 3) Underwriting - process of evaluating a borrower's loan application to determine the risk involved for the lender 4) Servicing - collecting monthly payments, maintaining records of payments and balances, collecting and paying taxes and insurance, remitting funds to the note holder, and following up on delinquencies VA Loan Terminology - guaranteed, qualification, eligibility, entitlement - Answer 1) Guaranteed - partial guarantee on the loan protects the lender against loss if the payments are not made 2) Qualification - based upon residual income and debt to income ratio 3) Eligibility - the Veteran's entitlement to VA home loan benefits under the law, based on military service 4) Entitlement - the dollar amount the VA will guarantee on each VA home loan and helps to determine how much a veteran can borrow before needing a down payment Primary Market vs. Secondary Market - Answer 1) Primary - where borrowers and mortgage lenders come together to create and negotiate terms of mortgage transactions 2) Secondary - exists for the purchase and sale of existing mortgages to investors; designed to provide greater liquidity to the residential real estate market by providing for a steady supply of funds from investors Front & Back qualifying ratios and calculations - Answer 1) Front End Ratio - used to qualify a borrower for a loan based upon the proposed house payment and his or her gross monthly income (GMI). In conventional lending, a front ratio of 28% means that the house payment (PITI) cannot exceed 28% of the borrower's gross monthly income.28% × gross monthly income = Max. monthly house payment 1 / 2
Champions Real Estate Finance (Exam Review)Rated 100% Correct!!2) Back End Ratio - the ratio of the borrower's total recurring monthly debts, including such obligations as the house payment, payments on all installment debts, monthly payments on all junior liens, alimony, car lease payments, and other recurring payment obligations. In conventional lending, it is usually 36%. Both ratios must be satisfied.36% × gross monthly income = Max. PITI and debts per month Loan originator registration system - Answer Nationwide Mortgage Licensing System and Registry (NMLSR) FHA loan program administrators - Answer - part of HUD
- started in 1965
- operates from self generated income
- color
- national origin
- sex
- religion
- families with children
- disabilities
Fair Housing Rules and protected categories - Answer - race
Elements in a PITI payment - Answer Principal, Interest, Taxes, Insurance FHA loan advantages vs. VA - Answer 1) Qualifying ratios are slightly more lenient allowing borrowers to have more debt and still qualify 2) LTVs are very high, allowing buyers with little money for a downpayment to purchase a property. Points on FHA loans can be paid by either the buyer or the seller TVLB program features - Answer - gives Texas Veterans and military members the opportunity to borrow up to $150,000 to purchase land at competitive interest rates while typically requiring a minimum five percent down payment for tracts of one acre or more.
Features of an ARM - Answer - Index: what the lender uses as an instrument for
measuring changes in interest rates.
- Margin: the percent added to the index in order to calculate the payment interest
- Interest Rate Cap: places a limit on the amount the interest rate can increase or
- / 2
rate
decrease at each adjustment rate; limit how much interest can change -Initial Interest Rate Period: interest rate is lower at the beginning of a loan, then increases throughout the loans life