Ch 30: Government and Conventional Loans Flashcards
What are the guidelines regarding prepayment of an FHA loan?
There are no prepayment penalties on FHA loans on one-to-four-family residences. However, the borrower must give 30 days written notice to pay a loan in full before it is due.
How long are FHA conditional commitment appraisals good for?
Six months on existing property and one year on new construction
How is the Mortgage Payment Expense to Effective Income ratio calculated?
The lender will take the total mortgage payment (principal and interest, escrow deposits for taxes, hazard insurance, mortgage insurance premium, homeowners’ dues, etc.) and divide that amount by the borrower’s gross monthly income. The maximum ratio to qualify is 31%.
What are the two major reason why the FHA 203(b) loans are most popular?
FHA 203(b) loans allow individuals to finance up to 97 percent of their home loan and is also the only loan in which 100 percent of the closing costs can be a gift from a relative, non-profit, or government agency.
What document must a veteran provide that shows the amount of loan entitlement available to him or her?
A Certificate of Eligibility
What is the maximum VA home loan term?
30 years and 32 days.
In a VA loan, how is the funding fee calculated?
It is a percentage of the loan amount charged for the privilege of obtaining a VA loan.
In a VA loan, what document shows approval of the value of the property to be equal to or greater than the sales price?
A Certificate of Reasonable Value (CRV)
Name one disadvantage of a conventional loan?
Typically, conventional loans require higher down payments than government-backed loans require.
Some conventional loans carry prepayment penalties, while government-backed loans do not.
Why is a conventional 80/20 loan called an uninsured loan?
The mortgage itself provides the only security for the loan.
According to Federal law, PMI must be terminated after the borrower has reached what two goals?
Has accumulated 22% of equity in the property (loan-to-value ratio is 78%).
Is current with all loan payments.
What are the two most common sources for second mortgages?
The home seller and institutional lenders
VA loans were freely assumable prior to March 1988. Since then, a purchaser who desires to assume an existing VA loan must qualify with:
the original lender.
What term describes the maximum number of dollars that DVA will pay if the lender suffers a loss?
The entitlement
When working with FHA the mortgaged real estate must be appraised by:
an approved FHA appraiser.
