Addenda

Question 1

What is the most common FHA loan type by number?

Answer 1

The FHA 203 (B) loan

Question 2

What is the current maximum dollar allowed by the General Land Board of Texas?

Answer 2

$424,100

Question 3

What document is to be used if the buyer is applying for a loan with conventional, FHA, VA or other forms of financing?

Answer 3

The Third Party Financing Addendum for Credit Approval addendum.

Question 4

What must be included in all addenda?

Answer 4

All addenda must have the names of the parties involved and the legal address of the property it pertains to.

Question 5

What is an ad valorem tax?

Answer 5

A property is taxed according to the value the taxing authority places on the property.

Question 6

The TREC No. 41-2 addendum is used for what purpose?

Answer 6

Loan Assumptions

Question 7

What are the two possible ways to deal with an unbalanced closing statement?

Answer 7

There are two possible ways this could be dealt with:
The buyer could pay the seller cash for the difference at closing.
The sales price will be lowered to reflect the new lower amount that is owed on the property.

Question 8

What form should a seller use to avoid any responsibility for an assumed loan beyond the closing?

Answer 8

The seller may want to use the TREC Release of Liability Addendum.

Question 9

According to the TREC promulgated Seller Financing Addendum how many days does the buyer have to get financial information to the seller?

Answer 9

It is negotiable

Question 10

Name just two, of the many conditions that a buyer must meet in order to assume a VA loan?

Answer 10

Is a veteran
Has sufficient unused entitlement
Is otherwise qualified

Question 11

What type of loan assumption requires a lawyer directed transaction?

Answer 11

Financing through a contract for deed

Question 12

How many pages long is the Addendum For Release Of Liability On Assumed Loan And/Or Restoration Of Seller’s VA Entitlement?

Answer 12

One Page

Question 13

If an agent fails to list an addendum on a contract

Answer 13

the intentions of the parties to the contract may be in jeopardy and the agent could be held responsible.

Question 14

The Third Party Financing Addendum for Credit Approval addendum is to be used

Answer 14

if the buyer is applying for a loan with conventional, FHA, VA or other forms of financing.

Question 15

The buyer should have been prequalified by a lender prior to writing any contract for the purchase of real estate

Answer 15

The loan term would be in relation to the buyer’s desire to extend the loan and pay more in interest but lower each monthly payment or to raise the monthly payments but shorten the payoff.

Question 16

The funding fee

Answer 16

is the fee VA charges to protect the lender from default by the buyer. The Funding Fee is similar to the Mortgage Insurance charged with conventional and FHA loans, except the VA states it is a guarantee.

Question 17

Many lenders write their due on sale clause (alienation clause) in such a way

Answer 17

that a borrower would not be allowed to have someone assume the loan.

Question 18

Even though a buyer will have to qualify the same as getting a new loan, the buyer may still want to assume the seller’s existing note.

Answer 18

One reason a buyer may want to assume is because the interest rate of the current loan is less than the market rate. The amount of the interest spread (difference of the two interest rates) needs to be at least two percent.
A second reason a buyer may want to assume is because the current note has been paid down a considerable amount. With each additional payment, more of the money goes to principal than to interest because most of the interest is paid in the beginning.

Question 19

A licensee may have a buyer and a seller who want to negotiate financing through a contract for deed, but there are no promulgated forms available to do so

Answer 19

The licensee would have to send the buyer and seller to an attorney to provide the paperwork for that kind of loan

Question 20

A seller’s deed will contain any loan assumption clause by FHA, VA or any conventional lender

Answer 20

The seller should be ready and willing to provide his or her deed.