Chapter 5: Basic Mortgage Origination Concepts of MortgageFinancing Flashcards
A percentage point paid to the loan originator as a fee for his service is known as a A. Discount Points B. Origination Points C. Par D. Margin
Answer B.
origination points are paid to the loan originator as a fee for his service.
Fixed Percentage rate point that reflects the lender’s profit and overhead is known as A. Discount Points B. Origination Points C. Par D. Margin
Answer: D
A margin is a Fixed Percentage rate that reflects the lender’s profit and overhead.
Points Paid to the lender for lowering the interest rate is known as a A. Discount Points B. Origination Points C. Par D. Margin
Answer A
Discount points are paid to the lender for lowering the interest rate,
Which of the following is known as the “break-even” rate for the Lender
A. Discount Points
B. Origination Points
C. Par
D. Margin
Answer C
A par interest rate is the “break-even” ratefor the lender. If a borrower wants a rate lower than par, the lender charges
the borrower discount points.
A par is known as
A. A percentage paid to the loan originator as a fee for his service.
B. Fixed Percentage rate that reflects the lender’s profit and overhead.
C. Paid to the lender for lowering the interest rate
D. the “break-even” rate for the Lender
Answer D
A par is the “break-even” rate for the Lender
Which of the following is true of a margin?
A. A percentage paid to the loan originator as a fee for his service.
B. Fixed Percentage rate that reflects the lender’s profit and overhead.
C. Paid to the lender for lowering the interest rate
D. the “break-even” rate for the Lender
Answer B
A margin is Fixed Percentage rate that reflects the lender’s profit and overhead.
Which of the following reflects an Origination point?
A. A percentage paid to the loan originator as a fee for his service.
B. Fixed Percentage rate that reflects the lender’s profit and overhead.
C. Paid to the lender for lowering the interest rate
D. the “break-even” rate for the Lender
Answer A
An Origination point is a percentage paid to the loan originator as a fee for his service.
Which of the following is true of Discount points? A. They are fixed B. They are temporary C. They are fixed or temporary D. They reflect the margin
Discount point can be fixed or temporary
Which of the following is true of Discount points?
A. The cost of the points are counted as closing cost
B. The cost of the points are counted S pre-paid cost
C. They are fixed points
D. They reflect the margin
Answer A
Discounts can be either temporary or fixed, and the cost of the points is a closing cost, which is typically paid by the buyer who also pays the origination points.
Which is true of fixed rate discount points?
A. They are known as buy-down interest rate
B. The remain the same throughout the term
C. The borrower gets a lower interest rate that increases or decreases with the market
D. the borrower gets a lower interest rate for the life of the loan, but has to pay an additional 1% of the loan amount at closing for each point.
Answer D
With a fixed rate discount - the borrower gets a lower interest rate for the life of the loan, but has to pay an additional 1% of the loan amount at closing for each point.
Which is true of temporary rate discount points?
A. They are known as buy-down interest rate
B. The remain the same throughout the term
C. The borrower gets a lower interest rate that increases or decreases with the market
D. the borrower gets a lower interest rate for the life of the loan, but has to pay an additional 1% of the loan amount at closing for each point.
Answer A
Temporary rate discount are buy down points to temporarily lower the interest rate.
Which of the following is a temporary discount buy down loan? A. FHA 1-2 B. FHA 2-1 C. ARMS 5-2 D. 360/180
Answer B
an FHA 2-1 buy down allows a purchaser to reduce the initial
interest rate on the mortgage by 2% the first year, 1% the next year, and 0% every year thereafter
If a borrower wants a rate lower than par, what should the lender do? A. Increase the margin B. Apply discount points C. Increase the index D. Charge a per diem
Answer B
If a borrower wants a rate lower than par, the lender charges the borrower discount points. Discounts can be either temporary or fixed, andthe cost of the points is a closing cost, which is typically paid by the buyer who also pays the origination points.
Suppose there are 10 days left in the month including the closing date, andthe loan amount was $100,000 at 7% interest. How much interest does the borrower owe the lender at closing? A. $ 189.72 B. $ 289.26 C. $191.78 D. $ 120.98
Answer C
Multiply the loan amount by the interest rate to give annual interest
Divide that calculated annual interest by 365 days in a year to give the daily amount of interest
Multiply the daily interest by the number of days remaining in the month
(($100,000 loan x 7% interest)/365 days) x 10 days = $191.78
The loan closes on May 2. When is the first mortgage payment due? A. May 2 B. June 2 C. July 1 D. August 15
Answer C
