Chapter 11: Loan Classifications Flashcards
What is the VA Loan?
A loan for military personnel that is “guaranteed” by the government
- Has 100% L/V
- Has no limit of what is guaranteed
- Lender determines amount limit it will lend
- VA determines amount limit it will approve
- VA does not provide loan; must get loan from lender
- Does not require a down payment
- Does have a funding fee (waived for disable vets)
- Must be owner occupied
- Can only have 1 VA loan active at a time
- Can prepay w/o penalty
- May not be required to pay more than 1% orig. fee
What is the instrument a VA loan uses to determine what it will guarantee on its loan?
Certificate of Eligibility
What is a Certificate of Reasonable Value (CRV)
Instrument used by the VA to determine the market value appraisal for a home.
What form does a VA loan appraiser use?
URAR (Uniform Residential Appraisal Report)
What is an FHA Loan?
- Insures loan (not guarantee it)
- Doesn’t build homes or lend
- Had MIP (Mortgage Insurance Premiums)
- No longer allows closing costs to be financed
- Sets a “maximum mortgage limit”
- Can pre-pay w/o penalty
- Can use loan for home improvement
- Loans after 12/5/89: no assumptions w/o complete buyer qualification
Who is RECD (Rural Economic & Community Development Administration)?
A federal agency under he U.S. Department of Agriculture that handles emergency farm financing that channels credit to farmers and rural residents and communities.
What is a conventional loan?
- Any loan that’s not VA or FHA
- Conventional Loans have PMI (Private Mortg. Insur.)
3.
Who was the first insurance company to insure conventional loans?
The Mortgage Guaranty Insurance Corporation (MGIC)
What is an Adjustable Rate Mortgage?
- Rate fluctuates based on economic “index”
- Rate determined by adding premium “margin” to the index
- Rates are limited to 1 per year
- Has a “CAP” on how much it can increase in 1 yr and over the life of the loan.
What is a Graduated payment mortgage?
- Interest rate and maturity are fixed
2. Monthly payment gradually increases
What is a Buydown mortgage?
Some of the interest is paid in advance to temporarily lower the interest rate
What is a Budget Mortgage Loan?
A mortgage that consolidates insurance and tax payments into the principal and interest. This allows the property owner to write one check each month for all housing expenses.
- Required on all FHA and VA loans
When taxes and insurance are combined together it is called?
Impounds (Called “Lender’s Reserve”)
What is a package mortgage?
Loan that includes the real estate, fixtures, and appliances installed on the premises.
What is a blanket mortgage?
Loan that covers more than one parcel or lot.
- Normally used to finance subdivision developments
- Includes a “partial release” clause.