Chapter 9 - Finance: Understanding the Process

Question 1

the key to most real estate transactions is

Answer 1

financing

Question 2

the rate stated in the note is

Answer 2

nominal interest rate

Question 3

the charge for borrowing money is called

Answer 3

Pinterest

Question 4

points are figured on the

Answer 4

amount of the new loan

Question 5

a charge to the borrower for paying off all or part of a loan balance before the due date is

Answer 5

called a prepayment penalty

Question 6

a prepayment penalty for one to four unit Home Loans is only enforceable during the first

Answer 6

5 years of the loan

Question 7

impound accounts are prepaid items consisting of reserves for

Answer 7

property taxes, Hazard Insurance, mortgage insurance

Question 8

which of the following is considered an Institutional lender

Answer 8

savings banks, commercial Banks, life insurance companies

Question 9

which of the following are direct lenders who fund loans themselves using an Investor’s guidelines then sell the loan to that investor

Answer 9

Mortgage Bankers

Question 10

which of the following are licensed and shop for a lender for the borrowers and earn a fee by putting lender and borrower together

Answer 10

mortgage brokers

Question 11

savings and lender interest rates are generally determined by the market but influence by actions of the

Answer 11

Federal Housing Finance board and the Federal Reserve board

Question 12

a loan for which the payments are usually the same each month for the life of the loan is a

Answer 12

fixed rate mortgage

Question 13

what occurs when monthly installment payments are insufficient to pay the interest accruing on the principal balance, so that the unpaid interest must be added to the principal due

Answer 13

negative amortization

Question 14

with which loan product can the borrower receive monthly installments, or a lump sum, and the loan is usually only due and payable if the borrower discontinued is occupying the property

Answer 14

reverse mortgage loan

Question 15

FNMA stands for

Answer 15

Fannie Mae, Federal National Mortgage Association

Question 16

which of the following Federal access allows loan applicants who have data collected to see their files

Answer 16

the Fair Credit Reporting Act

Question 17

what is the difference between market value and existing loans against the property called

Answer 17

equity

Question 18

but SAFE Act stands for the

Answer 18

secure and fair enforcement mortgage licensing

Question 19

as a broker, you must keep the mortgage loan disclosure statement on file for

Answer 19

3 years

Question 20

charging more than the legally allowed percentage of interest is called

Answer 20

usury