Day 1 Flashcards
What is an appraisal?
An appraiser’s opinion of value
What is the loan to value ratio (LTV)?
The percentage of value or sales price that a lender is willing to finance
What is Highest and Best Use?
The legal use that gives the highest return in money and /or amenities
Principles of Contribution
Principle of Change
Principles of Anticipation
Principle of Substitution
A commodity’s value is influenced by the cost of acquiring a substitute or comparable item
Principle of Regression/Progression
The Presence of lower priced properties in the area will cause a decline in the value of the subject property
What are the Characteristics of Value ?
Demand
Utility
Scarcity
Transferability
What is Market Value?
The most probable price a property should bring in a competitive and open Market under all conditions requisite to a fair sale under guidelines published by Fannie Mae & Freddie Mac
What affects the value of a property?
Social , Economic,Governmental and Environmental influences
What standards to Appraisers follow?
USPAP- Uniform Standards of Appraisal Practice
What are the 3 approaches to value?
Sales Comparison Approach,Cost Approach,Income Approach
What is the Sales Comparison approach?
AKA Market Data approach, appraiser focuses on recent sales in determining the value of the subject
What is Functional Obsolescence?
The Loss in the desirability of the style, layout or function of an element of a property over time. example old heating system adding bedrooms weirdly
What is External Obsolescence
Refers to the loss in value of a property caused by factors outside of the property itself ie a landfill being built close by
What is Consummation?
The closing of a real estate transaction in which all appropriate documents are signed and the proceeds of the mortgage loan are disbursed by the lender
What is the Equal Credit Opportunity Act (ECOA)?
Originally passed in 1974, ensures that all consumers are given an equal chance to obtain credit
What type of discrimination does the Equal Credit Opportunity Act (ECOA) prohibit?
Discrimination based on :
-Race
-Color
-Religion
-National Origin
-Sex
-Marital Status
-Age (as long as it’s not a minor)
-Receipt of income from a public assistance program
-The good faith exercise of any right under the consumer credit protection act
What is the Secondary Mortgage Market?
Exists for the Purchase and sale of existing mortgages to investors. It is designed to provide liquidity tot he residential real estate market.
What is Fannie Mae?
Federal National Mortgage Association (FNMA) Plays a vital role in financing mortgages and increasing home ownership opportunities in the United States
What is Freddie Mac?
Just like Fannie Mae , Started for checks and balances
Stands for Federal Home Loan Mortgage Corporation (FHLMC)
Why is Loan Pre Qualification/ Pre Approval good ?
Helps the Buyer :
-Be more realistic when setting pricing goals
-Buyers Agent has a better understanding of the buyers ability to pay
-The buyers Agent can avoid showing properties that the buyer cannot afford
-Sellers are somewhat reassured that the buyer has sufficient income and credit to close the transaction
How long does the Originator have to provide the buyer with the Loan Estimate?
Loan Estimate must be provided no later than 3 business days after receipt of the written application