Down Payment Calculations

Question 1

If a person made an offer to purchase a home for $100k and placed $4,500 in earnest money deposit at the time of the offer and is receiving a 95% LTV loan with $1,000 closing costs; how much would this borrower need to bring to the closing table?
a. $5,000
b. $4,750
c. $0
d. $1,500

Answer 1

D.

100kx0.05 -4500+1000

Question 2

Which of the following cannot be accepted as a form of down payment?
a.) Gift from relative
b.) Cash advance on Credit Card
c.) 401K advance
d.) Gift from MLO

Answer 2

D.

Question 3

What are points?

Answer 3

% of the loan amt. Discount point is 1% of loan amt , used to buy rate down
- Prepay interest through discount point

Question 4

EX: $275,000 loan amount and the borrower agrees to pay 1.5 discount points - what is the total cost?

Answer 4

$275,000 x 1.5% = $4,125

Question 5

What is basis point?

Answer 5

1/100th of 1% aka 100 basis points is 1%

Question 6

What is buy down mortgage

Answer 6

Fixed rate loan - borrower is given payment based on lower rate but actual rate if fixed higher rate and someone else is paying the difference

Question 7

What is Amortization

Answer 7

Is gradual reduction of a debt over a given period

Question 8

Negative Amortization

Answer 8

Increase in principal balance of a loan caused by failure to make payments that cover the interest due

Question 9

How to computer Interest Only payments

Answer 9

Multiply interest rate times loan amt and divide by 12 to get monthly

Question 10

IO payment example:$350,000 loan for 30 years at 5.75% IO loan, what is the monthly payment?

Answer 10

$350,000 x 5.75% multiply to get annual interest of $20,125 / 12 = $1677

Question 11

What is daily interest

Answer 11

interest collected at closing to start payment on first of the month