Methods of Financing - ANS - Equity
- Principal
- Interest
Equity - ANS is the difference between a home's value and the debt owed on it. Equation is
Equity = value - amount owed
Principal - ANS is the actual amount borrowed
Interest - ANS is the cost of borrowing money, stated as an annual percentage
Amortization - ANS is paying off a loan over time. Amortized loans are paid in monthly
installments of principal and interest. A fixed-rate fully amortized loan will amortize by the end of
the loan term.
Discount Points / loan points - ANS buyers can pay this at closing to achieve a lower interest
rate that lasts for the life of the loan.
Loan Origination Fee - ANS lenders charge this as compensation for making the loan. These
fees are expressed as points. In general, loan origination fees can't exceed 3% of the loan
value.
Buydown - ANS is an interest prepayment the borrower makes to reduce the loan's interest rate
for the first two to three years of the loan and thus reduce the monthly payments
Institutional mortgage loans - ANS from banks, mortgage bankers, credit unions, etc. are
categorized as either conventional or government (non conventional) loans.
Conventional Mortgage Loans - ANS offer a wide range of loan products with more diverse loan
terms. The federal government does not insure or guarantee these loans. Conventional loans
may require a down payment of up to 20% of the purchase price.
The two primary government financing programs involve - ANS the Federal Housing
Administration, FHA, and the U.S. Department of Veterans Affairs, VA. Neither FHA nor VA
actually funds loans to consumers.
When a deed of trust used as the security instrument for a mortgage loan, which of the following
is a true statement? - ANS It's generally much easier for a lender to foreclose on a property
, Robin has great credit and was able to secure a loan for her ocean side dream home. Her 30
year fixed-rate loan is for an amount that's above conventional loan limits. What type of loan
does Robin have? - ANS a non-conforming loan
Which of the following is an acceptable ad based on Regulation Z? - ANS Get a low interest rate
of 4.75% (4.925% APR) with as little as 10% down payment and a 30 year fixed rate with no
points.
Loans that are outside of Freddie Mac's and Fannie Mae's guidelines, such as jumbo loans are
non-conforming loans - ANS
Which of the following is generally true of flood insurance? - ANS It is usually purchased
separately or bundled with a homeowners policy but its not standard.
A calculation that describes the amount being borrowed compared to the value of a property is
called __________ ratio. - ANS loan to value
Under RESPA's section 8, which of the following would be considered a kickback? - ANS A title
insurance company buys you dinner to thank you for referring a client.
When a settlement service provider accepts anything of value for referring a client, this is
considered a kickback under RESPAs Section 8. - ANS
Seller Jamieson is closing on his property with buyer Conrad. Jamison paid the current year's
property taxes already. Is this a prepaid or accrued expense, and how will it be represented on
the settlement statement? - ANS The taxes are a prepaid expense, and will appear as a buyer
debit and a seller credit.
which individual is responsible for ordering, preparing and reviewing closing-related documents,
such as the title policy and settlement statement? - ANS the closing agent
Jason purchased his dream home six months ago. After Jason received an inheritance from his
uncle, he diecitded to - ANS
one acre equals - ANS 43560 sq ft
over how many years is a residential income-producing property depreciated? - ANS 27.5 years
net income formula - ANS gross income minus operating expenses
Correlation - ANS through correlation process, the most weight may be given to one or two
comparable, or equal weight may be given to all. The term reconciliation is often synonymous
with correlation.
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