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Real Estate > Financing in California > Flashcards

Financing in California Flashcards

1
Q

Mortgage

A

Is a legally binding document that creates a lien security interest on a piece of property that gives the mortgage lender the right to foreclose on the property is the mortgagor, borrower defaults.

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2
Q

Title theory

A

The borrower receives the deed, but the lender keeps the title and owns the house until the borrower pays off the loan. Similar to an automobile purchase through financing. Easier to foreclose a property and a title theory state.

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3
Q

Lien theory

A

The borrower holds the title and owns the house, but a promissory note signed by the borrower, gives the lender the right to seize and sell the house. Should the borrower default. The document. That place is a lien on the property is the mortgage. That shows up on the title, property cannot be transferred without the debt to the mortgagee being satisfied

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4
Q

Promissory note

A

Promise on the part of the bar war, to repay certain some of the money to another party, the payee or holder, under a certain set of terms

Principal and interest
The length of a loan
Late fees and payment penalties
Description is default
Accurate date

Negotiable instrument meaning the holder may transfer the right to receive payments to a third-party

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5
Q

What is a mortgage?

A

A legally binding document that is a lien against a property

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6
Q

Who is the mortgagor?

A

The borrower

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7
Q

Who is the mortgagee?

A

The lender

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8
Q

Deed of trust

A

Similar to a mortgage, in this document, the borrower conveys title for the property to a trust, which hold it as security for the lender

Example, some states use deeds of trust, others use mortgages. Often mortgage is used, even when a person means deed of trust.

both are accompanied by a promissory note, which is the borrowers promise to repay the loan.

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9
Q

Lien theory

A

The state adopt the lenders mortgage is a lien on a property. A title theory state says that the lender owns the property until the loan is paid off

The link is the lender the right to seize and sell the house. Should the borrower default

Usually results in court order that allows the lender to seize and sell the home
Called judicial foreclosure

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10
Q

Judicial foreclosure

A

Foreclosure process requiring court proceedings

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11
Q

Deeds of trust title theory

A

Are involve three parties, the borrower, or Trustor, the lender, or beneficiary, and a third-party, or trustee. Borrowers have equitable title until they’ve paid the loan. The trustee holds the legal title via the deed of trust till it’s paid off.

Some states attorneys act as trustees, and some other states, title insurance companies often provide the service

When the buyer has repay the loan, the lender directs the trustee to release the title to the borrower by granting a reconveyance deed to the borrower, who now owns the house, free and clear.

Trustee holds the title, and can legally sell it if the buyer defaults. The lender just Hass to prove that the borrower defaulted in the process called non-judicial foreclosure.

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12
Q

Nonjudicial foreclosure

A

A lender is able to sell a property in the event of a fire default, without going through the court system, usually granted be at a power of sale clause in the security instrument

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13
Q

Title theory

A

The theory that a lender owns the property until the underlying loan is paid off

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14
Q

The difference between lien theory and title theory

A

Lien theory: lender hold a lien on the property, but not Teitel, and therefore must use judicial foreclosure, lender has Lien

Title theory : lender, actually a third-party, holds legal title, and can use nonjudicial foreclosure, lender has title.

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15
Q

Involves two parties, the borrower and lender

A

Mortgage

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16
Q

Involves three parties, the borrower, lender, and trustee

A

Deed of trust

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17
Q

Backed by a promissory note

A

Both deed of trust and mortgage

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18
Q

If a mortgage is being used, which party received the following items
Mortgage and promissory note
The lender or the trustee

A

The lender

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19
Q

How does a deed of trust work?

A

The deed of trust goes to the trustee
The promissory note goes to the lender

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20
Q

discount points

A

Points a lender charges at closing, buyer, sometimes up to pinpoint to get a lower rate or to buy down the interest rate

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21
Q

Negotiable instrument

A

A document that conveys and unconditional promise to pay a fixed amount, with or without interest

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22
Q

Mortgage bond

A

May be used instead of a promissory note. May face foreclosure. Each state has rules. Weather Bon may be used instead of a promissory note.

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23
Q

Promissory note items

A

Principal, interest rate, lonely, discount, points, payment penalties

This isn’t a foreclosure document. However, the note should include late fee, information, default, circumstances, and process, if a borrower defaults.

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24
Q

Negotiable instrument

A

May not be payable on demand

Interest is charge for the money owed, the rate of interest, which may be fixed or variable, must appear either on the instruments out, or it must be referenced in an associate a document

The negotiable instrument may not contain any conditions for payment, it must be unconditional

Maybe handwritten, typed, or pre-printed
Payable on demand if no, definite time is stated
Interest rate is included, which is a fixed variable, must appear, either in the instrument itself or referenced in a document

Signatures may be printed or stamped

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25
Q

Promissory note terms

A

The amount charged for the use of the money = interest

Type of prepaid interest that borrowers pay to lower a loans interest rate = discount point

Feed that’s charged when a borrowers pays a loan off early = prepayment penalty

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26
Q

Promissory and Usery facts

A

All private lenders are not subject to use three laws, so use caution when working with them

Usery laws vary by state to state

Private lenders aren’t part of federal lending system don’t fall under Usery laws therefore borrowers should use caution and ask for a statement of all closing costs, the interest rate, and effective rate before making a financing commitment

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27
Q

Security instrument

A

A mortgage document

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28
Q

Steps on mortgage clauses

A

1 identifies parties, it also references that the note may be either be a part of the instrument or separate instrument . Borrower = security instrument. “I” “me”

Lender keep escrow funds, safe in a lending institution, use the escrow funds to pay the escrow items.

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29
Q

Why is it important for the borrower to assure the lender that a title is clear of defects?

A

It provides a good and marketable title for the lender to sell upon foreclosure. In the event of default, the lender will claim the property and sell it to recoup money from the original lien.

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30
Q

Does the lender or borrower deposit escrow funds?

A

Lender mortgagee

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31
Q

Does the lender or borrower pay the mortgage and property taxes?

A

Borrower mortgagor

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32
Q

Defeasance

A

Means the Barbara will receive the full title was the debt is repaid

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33
Q

Acceleration

A

A clause which gives the lender the right to make all money owed immediately due and payable in the event of the borrower defaults

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34
Q

Due on sale

A

Also called alienation clause requires the bar were to repay. The loan on the property was selling or transferring ownership of the property.

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35
Q

Prepayment penalty

A

This clause puts the bar I noticed that if the loan is paid off before a specific period of time, the lender may be owed additional interest

This protects the lender from losing profit = rare clause

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36
Q

Requires borrower to repay the loan when transferring ownership

A

Due on sale

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37
Q

Permits the lender to make the loan immediately due and payable is a borrower defaults

A

Acceleration

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38
Q

Stipulates that the lender may be owed additional interest if the buyer pays the loan off prior to the full loan period

A

Pre-payment penalty

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39
Q

Mortgage

A

A legally binding instrument that creates a lien on a piece of property

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40
Q

Acceleration clause

A

A clause in a mortgage that makes the entire day do immediately in the case of borrower defaults

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41
Q

Due on sale

A

A requirement at the bar, repay the loan when transferring ownership to another

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42
Q

Promissory note

A

I promise by a borrower to repay the loan

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43
Q

Payment penalty

A

And amount charged by the lender for interest, lost one a borrower cells or pay off a loan early

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44
Q

Mortgagor

A

The barrower

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45
Q

Mortgagee

A

The lender

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46
Q

Triggering term

A

A term that requires disclosure of other term related to the loan, if any such term is used, all terms must be disclosed

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47
Q

Biweekly mortgage plan

A

Pay half the mortgage payment every two weeks instead of once per month

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48
Q

1/12 mortgage plan

A

Dubai the mortgage amount by 12 and add the additional about to the monthly payment

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49
Q

Lump sum mortgage plan

A

Put a portion of any bonuses, tax returns, or other extra money towards the mortgage

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50
Q

Snowball mortgage plan

A

When another bill is paid off, add the amount to the mortgage payment

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51
Q

Recording mortgages

A

first mortgage (senior) - lien A recorded August 1, 2000
Junior mortgage - lien B - recorded July 1, 2010
Junior mortgage - lien C - recorded September 1, 2005
First mortgage - Lien D - recorded February 1, 2010 (because Lyndsey signed subordination agreement)

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52
Q

Jason bought a home in 2005 and obtained a mortgage from town land bank and trust. In 2010, he obtain a home equity loan from vanshield bank. And 2014 he refinance his mortgage through State mortgage. Vanshield bank has signed a subordination agreement. Who is First Junior and satisfied?

A

The refinance from State mortgage will pay off the Lim with Tile Lynn bank and trust. Vanshield thanks subordination agreement influences its spot, as well.

Vanshield bank lien would have been in the first spot had it not signed a subordination agreement. Since the day, this put state mortgage as the priority, even though the lien was recorded at a later date.

State mortgage lien = first
Vanished bank lien = Junior
Turn on land bank and trust lien =satisfied

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53
Q

Which of the following is the name of a penalty lenders charge when borrowers repay their loans earlier than expected?
Discount point
Late fee
Prepayment penalty
Usery

A

Pre-payment penalty

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54
Q

A trustee is holding title to Cassandra’s house until the loan is paid off in full. Which type of security instrument was used?
Deed of trust
Mortgage
Mortgage and deed of trust
Promissory note

A

Deed of trust
Three parties are involved, when a deed of trust is used, the lender (beneficiary), the borrower (Trustor) call mom and a neutral third-party (trustee). The trustee holds the title on the loans when a deed of trust is used.

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55
Q

Generally, there are covenants between the borrower and the lender within a mortgage document. What is one

A

Pay any charges and assessments against the property

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56
Q

What’s an upfront charge to make up for the difference between the interest rate and the borrower is paying and the rate the lender normally requires?
Discount point
Interest
Note
Usery

A

Discount point
A lender may charge discount points to make up for the difference between the rate the bar, where is receiving, and the rate the lender normally requires.

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57
Q

What type of foreclosure is commonly used with a mortgage is the security instrument?

A

Judicial

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58
Q

What is the mortgagor’s responsibility?

A

Keep the property in good repair

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59
Q

What describes a subordination agreement?

A

An agreement between two lienholders, to modify the order of lean priority

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60
Q

Jason purchased his dream home six months ago. After Jason received an inheritance from his uncle, he decided to pay off his mortgage. What should he consider before doing this?

A

Whether he will incur a payment penalty

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61
Q

PITI

A

Principal
Interest
Taxes
Insurance

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62
Q

A mortgage payment that has PITI (principal, interest, taxes, and insurance) lumped together is called a

A

Budget mortgage

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63
Q

Amortized mortgage

A

Payment amount remains stable, loan balance is reduced, a greater portion of the payment is applied to the principal balance.

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64
Q

Straight line loan

A

Portion of the payment applied to the principal remains the same with each payment, and the interest amount varies according to the outstanding loan balance each payment changes, and the barber makes higher installment payments at the beginning of the loan, when the loan balance is higher, and more interest is due. Overtime the amount of each installment payment lowers the outstanding balance

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65
Q

What is a mortgage constant payment method?

A

Amortized loan

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66
Q

What is a mortgage amount of combine principal and interest paid each month that remains the same over the loan term
Straight line loan
Amortized loan

A

Amortized loan

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67
Q

Payments change over the term of the lawn, generally, with hire payments at the beginning of the loan term
Straight line loan
Amortized loan

A

Straight line loan

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68
Q

What mortgage is also called constant amortization
Straight line loan
Amortized loan

A

Straight line loan

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69
Q

Reserves for taxes and insurance

A

Lenders require you to keep a reserve fund, a.k.a. escrow account or impound account, for taxes and insurance. Federal regulations limit the amount, but buyer should be prepared to put as much as 14 months worth of prepaid property, taxes, and insurance and reserves at closing time.

Lenders require borrowers, who live in floodplains to obtain flood insurance as a condition of obtaining their loan

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70
Q

What affects home affordability

A

Principal
Interest rates
Property taxes
Flood insurance

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71
Q

Reserve funds may also be called an escrow account
True or false

A

True

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72
Q

Reserve funds are designed for principal, interest, taxes, and insurance
True or false

A

False
A reserve fund is for tax and insurance payments

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73
Q

Lenders may require as much as 14 months worth of prepaid tax and insurance amounts, and reserve at the time of closing
True or false

A

True

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74
Q

Federally regulated lenders require borrowers to obtain flood insurance if the property is in a flood, playing as a condition of obtaining a mortgage
True or false

A

True

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75
Q

Flood insurance is standard coverage with most homeowners insurance policies
True or false

A

False

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76
Q

The national flood insurance program helps homeowners and flood hazard areas obtain insurance
True or false

A

True

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77
Q

Reserves and property taxes

A

1 At property tax payment time, will receive a property tax bill. If they’re paying their property taxes with their mortgage, they don’t have to pay this. important oh, if they pay twice will need to work with the lender to ensure that the property taxes aren’t withheld from the following period.

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78
Q

Buydown

A

The financing technique in which the buyer obtains a lower interest rate by buying down the interest rate at the time the loan is made. Lump sum pre-payment of interest to the lender at closing that buys down the interest rate to be low, the market rate, either temporary Lee or permanently. to apply for a larger loan.

Most are temporary

Can help the borrower qualify for a larger loan, keep payments lower for the first few years, includes principle and interest, reducing the loan balance overtime.

One, two, three months example year one, 3.75%, year two 4.75%, year three 5.75%.
Fourth year goes to regular original rate of 6.75%.

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79
Q

Example of a buy down

A

A buyer pays the lender two discount points so he can log into a 5.25% interest rate at closing.

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80
Q

What are types of property sales?

A

Sale subject for mortgage
Sale with assumption of a mortgage
Free and clear

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81
Q

Satisfaction of a mortgage

A

Release of mortgage, which is recorded

If a mortgage payment is not paid by the seller, they owe money that they possess. They need to have their attorney get them released from liability and make sure the mortgage is recorded, and the release of the mortgage is called a satisfaction of mortgage.

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82
Q

The seller is released from all liabilities. Any loan balance is paid off prior to or at closing. What type of mortgage property sale is this?

A

Free and clear

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83
Q

The buyer takes on the sellers mortgage and liability for the note. What kind of mortgage property sale is this?

A

Assumption of a mortgage

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84
Q

The buyer takes title of the property with the sellers lean still in place. What type of mortgage property sale is this?

A

Subject to existing mortgage

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85
Q

Satisfaction of mortgage

A

Records the release of a mortgage
Clouds the property tiled if the document is not recorded
Skip the release of the mortgage

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86
Q

Often, if a buyer tries to assume a sellers loan, a due on sale clause in the sellers mortgage is triggered
True or false

A

True

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87
Q

Loan assumptions make the most sense for the buyer if the interest rates have fallen, since the sellers loan was originated
True or false

A

False
Remember that, if a buyer assumes alone, he’s assuming the loans interest rate as well. What a fire want to pay more than the prevailing interest rate?

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88
Q

In addition to the assumed loan, the buyer will need to pay the seller for any equity in the property
True or false

A

True

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89
Q

When the fire assumes the debt, the lender me specify different terms
True or false

A

True

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90
Q

Your buyer clients have plenty for a down payment and closing costs, and they like to lower interest rate than the going rate. How can they use some of their save funds to get a better interest rate?

A

They can buy down the interest rate

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91
Q

What often compromises the sum total of a buyers mortgage payment?

A

Principal, interest, taxes, and insurance

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92
Q

Maddie is looking over some documents while preparing for the closing of her first home purchase. She says that her lender requires six months pre-payment of this in her escrow account.
Insurance and taxes
Insurance only
Late fees
Taxes only

A

Insurance and taxes

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93
Q

Reserve fund may also be called——— account
- Additional
- Escrow
- Insurance
- Taxable

A

Escrow
I reserve fund may also be called an escrow or impound account

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94
Q

Savings and loan association - also called thrifts

A

Specialized taking savings deposit, lending out through mortgage and loans. Required to keep their commercial lending at or under 20%, tied to consumers and mortgage loans.

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95
Q

Commercial banks

A

Bank of America chase, consumer and business loans, offer, investment products, and take deposits

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96
Q

Credit unions

A

Member-based cooperative, provide credit for auto loans and home loans. They take deposits and offer savings, vehicles, money, markets, and the like. Rates are competitive.

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97
Q

Mortgage, bankers, and mortgage brokers

Both concentrate on mortgage lending

A

Mortgage bankers actually do the lending. In-house loan, processors and underwriters. Wells Fargo mortgage is an example. Mortgage bankers can close quickly because they find their own loans, but range of offering is narrow and limited to their own products.

Mortgage brokers work with multiple lenders to search and negotiate the best deal for particular buyer circumstances. They don’t loan the money out themselves, they are not tied to a specific suit of lawn products.

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98
Q

Lending insurance companies

A

Nationwide, finance mortgage loans. These companies use their money to find out some types of mortgages.

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99
Q

Lending Investment groups

A

Many types of investment groups, that lens specifically to people who want to avoid conventional financing, such as other investors. These investment groups also purchase mortgage back securities.

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100
Q

Lender associations that accepts savings deposit an offer loans

A

Savings and loan associations

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101
Q

Lending national banks that offer, consumer and business loans

A

Commercial banks

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102
Q

Member based cooperative that provide credit for loans

A

Credit unions

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103
Q

Lending companies that finance, mortgage loans, but specialize in insurance products

A

Insurance companies

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104
Q

Lenders that are groups that man to those who want to avoid conventional financing

A

Investment groups

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105
Q

Who does the lending?
Mortgage bankers
Mortgage brokers

A

Mortgage bankers

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106
Q

Who has in-house loan processors and underwriters?
Mortgage bankers
Mortgage brokers

A

Mortgage bankers

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107
Q

Who has narrow offerings, which are often limited to their own products
Mortgage bankers
Mortgage brokers

A

Mortgage bankers they use in house

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108
Q

Who works with multiple lenders to search for a negotiate the best deal
Mortgage bankers
Mortgage brokers

A

Mortgage brokers

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109
Q

Do mortgage brokers, lend money themselves
Yes, or no

A

No

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110
Q

Primary market mortgage

A

Compromised of lending institutions that led directly to the consumer. They generate loans, then the package them and sell them on the secondary market. Primary loans are either conventional or government loans.

FHA and VA loans are examples of government loans

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111
Q

Conventional or government loans

A

Insured by the federal housing administration FHA or those guaranteed by the US department of Veterans Affairs VA.

Conventional loan, long to value ratio, LTV, the ratio of a loan amount to the value of the property being purchased = Islam value ratio exceeds 80%. The bar will likely have to purchase private mortgage insurance for the lender.

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112
Q

Private mortgage insurance PMI

A

An insurance requirement that protects the lender when it approves a loan with more than 75 to 80% of the purchase being financed

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113
Q

Loan term

A

30 year mortgage, we have a lower monthly payment, but what if borrower will not have a steady income in the future.

15 year mortgage will allow no mortgage payment when the plan is to have a fixed income

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114
Q

PMI termination

A

May terminate automatically, or the borrowers request under certain circumstances.

Automatic termination, when equity is scheduled to reach 22% based on original value, borrowers must be current on payments

Borrower requested termination made request to terminate PMI when principal balance on the loan is scheduled to reach 80% of homes original value, must be current on payments and good payment history, request termination in writing, prove no junior liens on property exist. Provide evidence such as an appraisal.

final termination is borrowers are current on payments, lender must terminate PMI one month after loan, reaches the midpoint of its amortization schedule, even if the LTV isn’t yet 78%. Will happen for bars who start out with a negatively amortized loan (interest only) call my some sort of balloon payment, balloon mortgage

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115
Q

Loan-to-value ratio LTV

A

The ratio of a loan amount to the value of the property being purchased

Example, if a loan to value ratio exceeds 80%, the bar we will likely have to purchase private mortgage insurance for the lender

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116
Q

SHA loans and mortgage insurance premium

A

Good for low credit score smaller down payment as little as 3.5%. Bowers must pay mortgage insurance premium MIP for light of the mortgage loan. Buyers pay portion of MIP at closing. The remaining premium is prorated and built into the monthly mortgage payments. There is a maximum loan amount, barbers last play anything above that in cash.

117
Q

VA loans

A

Government loan that’s strictly available to members and former members of the arm service guaranteed by the US Department of veterans affairs. Can pay little as nothing down, and doesn’t require a mortgage insurance.

118
Q

No federal agency participation in ensuring or guaranteeing the loan
Conventional
Governmental

A

Conventional

119
Q

Federal agency involvement, and ensuring or guaranteeing the loan
Conventional
Governmental

A

Governmental

120
Q

Requires PMI for down payment that are less than 20 to 25%
Conventional
Governmental

A

Conventional

121
Q

FHA or VA mortgage is
Conventional
Governmental

A

Governmental

122
Q

Allows down payments as low as 0.0 to 3.5%.
conventional.
Governmental

A

Governmental

123
Q

A borrower is purchasing 100,000 home using a conventional loan of $90,000 with a 10,000 down payment

Is this required to pay a PMI personal mortgage insurance?

A

Yes, since the homeowner has a down payment of 10% and the financing, the rest, the lender may require PMI

124
Q

What are two PMI a cancellation scenarios?

A

Automatically when borrowers equity reaches 22% of the original property value

By request from the barbers equity reaches 20% of the original property value

Automatic when the loan balance hit 78% or borrower request when the loan balance hits 80% equity. Bar where should contact our lender for questions about canceling PMI.

125
Q

VA appraisal

A

Certificate of reasonable value for CRV for veterans appraisal

126
Q

Facts about VA loans

A

VA loans are guaranteed by the US Department of Veterans Affairs. They do not insure them.

US Department of Veterans Affairs guarantees the loans

The borrower must be an eligible veteran, active duty, military, or surviving spouse, and must qualify for the loan

Barbers are not required to have a down payment

Veterans cannot use VA loans for investment properties

The loan amount may be for 100% of the CRV (VA appraisal) or 100% of the home sale price which ever is less

127
Q

What is required to be eligible for a VA guaranteed loan?

A

Suitable credit
Sufficient income
Valid certificate of eligibility

Not just any loan is given to anyone serving or who has served. There must be additional support in terms of credit and income flow. Of credit worthiness.

128
Q

Calvet loans through the California department of Veterans Affairs call the Farm and home loan division

A

I Calvet loans buys the property and holds the title, and then sells the property to the veterans using a contract of sale. Title is later transferred to the veteran with the loan is paid off through a grant deed.

Currently serving or honorably discharge served a minimum of 90 days of active duty
Buying owner occupied home or farm in California.

No requirement for being a resident in California in the last year is required

129
Q

Calvet loan characteristics

A

30 year term
There are no Prepayment penalties
Below market interest rates
Low or no down payment options
No mortgage insurance premiums
Upfront funding fees
Must occupy the property being purchased
Cannot lease or transfer it in anyway, without permission from Calvet
If younger than 62 years old, they have to buy life insurance.
All Calvet bar wars must purchase homeowners insurance through Calvet itself

130
Q

Federal reserve system

A

Feds the controls how much money is available and what banks charge for that money.

Keep the US finances in check, avoiding both runaway inflation and serious deflation

131
Q

Primary mortgage market

A

Banks that originate loans they have cash they loan it to borrowers
Primary mortgage market are homebuyers, a.k.a. bar, wars, and lenders, a.k.a. commercial banks, credit units, savings and loans, etc.

132
Q

Secondary mortgage market

A

Primary lenders want to loan money at one price, the package and Sutherlands to investors on the secondary market for slightly more money. They earn a profit by keeping money moving in and out of their system. The secondary mortgage market services those loans.

133
Q

How the market work together

A

conforming loan a secondary market loan that Fannie Mae and Freddie Mac will buy. Loan about must be maximum allowed for the property type and location. Additional standards include loan to value ratio, and buyer credit score so that the default risk is acceptable.

ability to repay rule = qualified mortgage income, assets, employment, credit history, loan ratios to help ensure the borrower has the ability to repay the loan.

Non-conforming loans and unqualified mortgages are more likely to be sold to a hedge fund concerns are private investors

134
Q

The federal reserve system Feds

A

Controls money, availability and what things can charge for that money

135
Q

Primary mortgage market

A

We’re banks that, originate loans operate

136
Q

Secondary mortgage market

A

Were loans are sold, held, and serviced

137
Q

What does the fed want to avoid

A

Runaway, inflation, and serious deflation

138
Q

What does the fed regulate for balanced economy?

A

Interest rates and available funds

139
Q

Secondary mortgage market, Claires

A

Franny Mae, federal national mortgage association, purchase any type of loan, conventional loans and commercial banks established in 1938

Freddie Mac federal home loan mortgage corporation, can purchase any type of loan, conforming, conventional loans and smaller, lending institution thrifts

Farmer mac federal agricultural mortgage corporation purchases, Articulture, all loans and loans from rural lenders

Ginnie Mac Government national mortgage association, guarantees mortgage back securities that contain loans insured or guaranteed by a US government agency does not purchase loans

140
Q

Why do lenders sell to secondary market

A

This frees up funds, so the lender can make additional loans. This frees the money for the original lender, which can then loan to others immediately instead of waiting for the mortgage to be paid off before loaning to others.

141
Q

Frannie Mae

A

Conventional, Sj, VA, and Rulal development loans

142
Q

Farmer Mac

A

Agricultural and Rulal loans

143
Q

Freddie Mac

A

Loans from smaller, lending institutions and thrift

144
Q

California housing finance agency CalHFA

A

Sells tax exempt bonds to raise money to purchase mortgages or deeds of trust from approved lenders.

Mortgages used in California = mortgages or deeds of trust
Do you trust is used in California mainly

CalHFA deed of trust, our 30 year fixed rate mortgage instruments choir mortgage insurance.

Available to first time homebuyers with low to moderate income

Complete education course, 5 acres, or under, located in California, US citizen, permanent resident qualified alien

145
Q

Call age of a approve borrowing eligibility

A

US citizen, permanent resident or qualified alien( doesn’t have to be a California resident)
Satisfies the underwriting requirements of lender and mortgage insurer
Requirement of purchase, or intense to utilize any Cal HFA’s down payment programs = 1st time buyer
Must live in home for the length of loan term
Completed Cal HFA homebuying education course

146
Q

CalHFA of a approve property eligibility

A

Home is located in California
Home is the purchasers primary residence
Home is a detached single-family residence, condo, unit is planned unit development PUD
Property is 5 acres or less
Sale price is equal to or less than the allowable sales price limit

147
Q

The VA will guarantee a loan based on sales price or the certificate of reasonable value CRV
True or false

A

True

148
Q

How did the primary and secondary mortgage market’s work together?

A

The primary packages loans to sell to the secondary market

149
Q

Any financial institute, with deposits that are insured by a federal government agency can sell mortgages to which institution

A

Freddie Mac FHLMC

150
Q

Shelley’s flower business is blooming and it’s time for her business to grow. She plans to take a business loan to open to more shots on the north side of town. Which lending institution which she most likely go to for the loan.
A commercial bank
Credit union
Investment group
Hey savings and loan

A

A commercial bank

151
Q

Robyn has great credit and was able to secure a loan for her Oceanside dream home. For 30 year fixed rate loan is for an amount that’s above conventional loan limits. What type of loan does Robyn have?
A conforming Freddie Mac loan
A government loan
FHA loan
Non-conforming loan

A

non-conforming loan
Loans that are outside of Freddie Mac and Fannie Mae guidelines such as jumbo loans our non-conforming loans

152
Q

David is an active duty member of the US Air Force assuming he and the property meet the qualifications, which type of mortgage may be the best option for him
A conventional loan
FHA loan
VA guaranteed loan

A

VA guaranteed loan

153
Q

Who qualifies for Calvet loans?

A

Military personnel on veterans

154
Q

Sandra retired from a career in the Navy and is ready to buy her first home, a small bungalow in a quiet neighborhood, for $169,000. Her military service gives her the benefit of Veterans Affairs VA loan what’s her required down payment

A

Zero

155
Q

The factors are looking at a $425,000 home. They have $90,000 in savings to use as a down payment. What loan type with a likely be the best option for them
Conventional
FHA
Va

A

Conventional
$90,000 down payment would be a little more than 20% down. They qualify for a conventional loan with that much to put down on the home and will avoid having to buy mortgage insurance.

156
Q

Rachel loves convenience. She was thrilled when she was able to finance her mortgage through the same institution where she deposits her payroll checks. Which financed Rachel’s mortgage
Insurance company
Investment group
Mortgage broker
Savings and loan

A

Savings and loan

157
Q

Which of these provide some protection to lenders in the event of our obtaining a conventional loan, does not have a down payment of 20 to 25%
Acceleration clause
Mortgage insurance premium
Prepayment penalty
Private mortgage insurance

A

Private mortgage insurance

158
Q

Lauren obtained a loan that that is insured, and that only require a down payment of 3.5% which of these most likely is the type of loan Lauren has.
Conventional
FHA
Home equity line of credit
VA

A

FHA federal housing authority, ensures the loan for the lender, because the down payment amount can be solo as little as 3.5% with this loan.

159
Q

Adjustable rate mortgage ARM

A

Is a loan with a rate that is adjusted, usually annually based on the behavior of the economic index with which is associated (consumer price index)

If the ARM has an interest rate of 5% and a lifetime Of 7% the maximum of that may be charged is 12%

160
Q

Lifetime Cap
Period cap

A

Lifetime cap is the value that limits the amount that interest can adjust at the mortgages first interest rate adjustment
The period cap limits the amount the rate can adjust at subsequent adjustment dates

161
Q

Margin

A

Margin is the number of percentage points that is added to the index to determine the rate the margin is constant throughout the life of the mortgage, the index value is variable.

Example index is 5% and margin is 2%, the fully indexed rate is 7%

162
Q

Lifetime Cap

A

Is the maximum interest rate above a given index that may be changed on the adjustable rate mortgage

163
Q

Initial cap

A

Is the value that limits the amount that interest can adjust at the mortgages first interest rate adjustment

164
Q

Period cap

A

Limits the amount, the rate can adjust at subsequent adjustment dates

165
Q

Amortization

A

Is the process of paying off alone by making periodic payments?

Most payments go towards interest what ever increasing amounts going towards principal until the loan is paid off

Example 30 year fixed rate loan will be fully amortized in 30 years

166
Q

Balloon payment

A

A lump sum payment usually at the end of a loan period

167
Q

Bridge loan

A

Is a temporary usually 90 days loan that provides funds an additional two existing loan until permanent financing can be obtained. Often used by buyers who have not yet sold their prior property but want to purchase a new property and is best used when the buyers current home is already under contract.

168
Q

Fixed rate loan

A

A loan in which the principal and interest payment remains the same over the life of the loan

169
Q

Graduated payment, mortgage GPM

A

Payments, gradually, adjust usually upward, based on a predetermined dead schedule. An amount over 5 to 10 years, then remain consistent for the rest of the long term. Initial payments are below. What would be a fully amortized payment, which creates negative amortization. Can make payments easier in the beginning when income maybe lower.

170
Q

Graduated payment adjustable rate mortgage GPMARM

A

Similar to GPM, but with a ARM characteristics. Payments may change if the index changes.

171
Q

Growing equity mortgage, GEM

A

Is a fixed rate mortgage where the monthly payments increase over time according to a set schedule or index. The interest rate remains the same and there is no negative amortization. First payment is fully amortizing payment. As the payments increase, the amount about what would be a fully amortizing payment is applied directly to the principal balance. This reduces the life of the term and increases the interest savings for the borrower.

172
Q

Home equity loan

A

A loan from the equity of a home. The property is on free and clear, the home equity loan is a first mortgage. If not, it is a second or junior mortgage. Rates on home equity loans tend to be higher than conventional loans, and their term rates shorter.

173
Q

Package mortgage

A

Is a mortgage and which personal property is included with real property in the sale. Might be used in the case of a furnished condominium, for instance, but is more commonly used in commercial real estate, where business assets are included as collateral

174
Q

Reversed annuity, or mortgage RAM

also called reverse mortgage, or equity conversion mortgage

A

Design for those who want to use their home equity to stay in their homes. With a reverse mortgage, the lender makes payments to the homeowner for a specified period of time and gains a security interest in the value of the home. It is geared toward home owners age of 62 or older.

175
Q

Renegotiable rate mortgage RRM

A

Generally a 30 year loan made up of short term loans. Add specify periods, usually every three or five years, borrowers have the option, to renew their loan, which may mean a change, and their interest rate, based on the index changes, or immediately pay the remaining loan balance, and interest due.

176
Q

Rollover mortgage ROM

A

A type of renegotiable alone, in which the interest rate is renegotiated at specified intervals, usually every five years

177
Q

Shared appreciation mortgage SAM

A

Mortgage in which the borrower initially receives an interest rate below the going market rate. And exchange, the lender receives equity or percentage of the appreciation in the properties market value.

178
Q

Straight term or term mortgage

A

A mortgage, in which on the interest payments are made, and the entire principle is paid at the end of the term

179
Q

Swing loan

A

Temporary loan, not secured by a mortgage, usually a loan of equity in one property that is used to obtain another property. When the original home is sold, the money from the sale pays off the swing loan.

180
Q

Adjustable rate

A

A loan, with a rate that fluctuates based on the economic index with which it is associated

181
Q

Amortized

A

That that is paid off by making periodic payments, mostly consisting of interest and principal

182
Q

Straight loan

A

A mortgage we’re only interest is paid until the end of the term, with the principal is paid

183
Q

Shared appreciation

A

A lonely, where the borrower receives a below market interest rate in exchange for the lender receiving equity

184
Q

Graduated payment loan

A

Alone, where the payments are adjustable, usually up, at specified. Over the life of the loan.

185
Q

Growing equity loan

A

A fixed rate mortgage where the monthly payments increase over time according to a set schedule

186
Q

Shared appreciation loan

A

A long were the borrower receives a below market interest rate in exchange for the lender receiving equity

187
Q

Bridge loan

A

A loan that provides funds in addition to an existing loan until permanent financing can be obtained

188
Q

Swing loan

A

A loan from the equity in a property that is used to obtain another property

189
Q

Renegotiable rate mortgage

A

A 30 year loan made up of short term loans when, at specified intervals, borrowers have the option to renew their loan, or immediately pay off the loan. If the bar renews, the interest rate may change based on the indexed charges.

190
Q

Rollover mortgage

A

Another renegotiable loan, has interest rate changes at specified intervals, but the barber doesn’t need to make a decision to renew the loan or pay it off

191
Q

Loan taken against the equity in a home

A

Home equity

192
Q

Equity loan usually buy the elderly to receive income from the equity in their home

A

Reverse mortgage

193
Q

Fixed rate loan

A

A long does principal and interest payment remains the same over the life of the loan

194
Q

Adjustable rate mortgage

A

A loan who’s rate is a Justin, usually annually, based on the behavior of the economic index with which it is associated

195
Q

Bridge loan

A

A temporary loan often used by buyers who have not yet closed on their prior property

196
Q

Swing halo an

A

The loan of equity in a property to purchase another property

197
Q

Graduated payment mortgage

A

Payments gradually, adjust,(usually upward) based on predetermined schedule and amount over 5 to 10 years, then remains consistent for the rest of the loan term

198
Q

Growing equity mortgage

A

Fixed rate mortgage where the monthly payments increase over time, according to a set schedule or index

199
Q

Reverse mortgage

A

Allows a person to stay in one’s home, while living off of the equity by selling it to a lender, who makes payments to the homeowner and exchange for ownership interest in the property

200
Q

Renegotiable rate mortgage

A

Long term loan made up of short term loans. At specified period, borrowers have the option to renew their loan, or immediately pay the remaining loan balance, and interest due.

201
Q

Rollover mortgage

A

A type of renegotiable loan in which the interest rate is renegotiated at specified intervals (usually every five years)

202
Q

Shared appreciation mortgage

A

Mortgage in which the borrower initially receive an interest rate below the going market rate. And exchange, the lender, Rics, equity, or a percentage of the appreciation and the properties market value.

203
Q

Land contract

A

Contract for deed, land, installment, contract, or in document sale agreement.

Agreement between seller and buyer, seller retains the title, buyer makes installment payments to the seller .

Often down payment, at the end of contract, balloon payment would equal the balance paid in full. The seller gives the buyer title.

204
Q

Purchase money mortgage

A

Seller issues a mortgage to the buyer towards the purchase price. Buyer use this as down payment financing. The seller is the mortgagee/lender, and the buyer is the mortgagor/borrower.

Maybe first mortgage, Junior mortgage or junior, wraparound mortgage

205
Q

Wraparound mortgage

A

Seller financing that wraps, the new buyers mortgage around the sellers existing mortgage. The seller continues to make payments on the first mortgage, and the buyer makes the payments to the seller on the wraparound mortgage.

206
Q

Sale leaseback

A

And investor will sometimes buy the property for cash, and then lease it back to the seller. This provides income for the investor and allows the building owner to remain in the building, conducting business, as usual, while free up capital that was stuck in real estate.

207
Q

Mortgage to finance real estate transactions for large financers, institutions

A
  • Commercial loans - non-mortgage loans from a bank
  • Bonds are stocks - large companies may sell stock and bonds to raise the capital to purchase real estate
  • Exchanges - trading properties
208
Q

Jen needs to free up some cash. She decides to sell her commercial property, but rather than moving to a new location, she Lisa’s the space from the new owner. What is this an example of

A

Sale leaseback

209
Q

Financing in which the seller issues a mortgage to the fire towards the purchase price of a home

A

Purchase money

210
Q

Financing that wraps, the new buyers mortgage around the sellers existing mortgage

A

Wraparound

211
Q

What is seller us as the lender for buyer, who purchases the property for an agreed-upon price?

A

Land contract

212
Q

Which type of mortgage has an interest rate that remains consistent over the life of a loan
Adjustable rate
Fixed rate
Growing equity
Pledged account

A

Fixed rate

213
Q

What type of loan is given based on the amount of equity a borrower has in the home
Bridge loan
Home equity loan
Shared equity mortgage
Swing Loan

A

Home equity loan

214
Q

With this type of loan, personal property is included with the real property in the sale. It’s commonly seen in commercial real estate, but you may also see this in the sale of furnished condominiums.
Blanket mortgage
Package mortgage
Shared equity mortgage
Wraparound mortgage

A

Package mortgage

215
Q

Vanessa owns a commercial space. She’d like to free up the capital she has invested in the place for other purposes, while continuing to occupy the space. She sells the property, then Brents the space back from the new owner. What is this an example of
Please sell back
Purchase money mortgage
Sale leaseback
Wraparound mortgage

A

Sale leaseback

216
Q

TILA truth in lending act
The consumer credit protection act 1968

A

Safeguard the consumer and the use of residential credit by requiring full disclosure of terms and conditions, if any offers of credit

An ad can show the APR without requiring triggers and a general way such as “ low down payment “or “easy financing “, no additional disclosures required

Trigger terms : down payment, payment amount, number of payments, interest, rate, other than APR

Lenders must provide a disclosure statement within three days of making Mont application. This includes annual interest rate on the loan, APR, any finance charges that apply. For borrowers refinancing, it must include the right to resend up to three days after closing on the loan.

217
Q

Equal credit, opportunity act, ECOA

A

Prohibits, discrimination, and financing based on: race, color, religion, national origin, sex, marital status, H, over the age of 18, the pendens on public assistance

218
Q

Real estate settlement procedures act, RESPA 1974

A
  • Enacted by the US Department of housing and urban development HUD
  • lenders must prepare a statement that shows how they’ve invested in low income and rehabilitation efforts
  • Community is geographic boundaries, identify investment credit offer, include comments from the public about how the lender is doing in and reading community meats.
  • Involves federal regulatory review by federal financial agencies such as:
    Comptroller of the currency, federal reserve board of governors, federal deposit, insurance corporation, FDIC, office of thrift supervision
  • Lenders must publicly post that they are subject to this review and make results of that review public
219
Q

What are two qualified mortgage types?

A

Qualified mortgage with Safeharbor status
A qualified mortgage with rebuttable presumption

220
Q

Qualified mortgage for Safe harbor status

A
  • Meet all criteria for qualified mortgage
  • Consumer account later claimed that the lender didn’t comply to repay requirements
  • Lower price loan because the lender assumes less risk
  • Prime loan as opposed to subprime
  • Offers borrower, greatest legal certainty that lender is complying with ability to repay rule
221
Q

A qualified mortgage with rebuttable perception

A
  • higher price loan because the lender seems more risk
  • Subprime loan offer to consumers who have insufficient or marginal credit history
  • Lenders are presume to have verify the borrowers ability to repay the loan
  • The borrower in default must show income/assets were insufficient to meet living expenses at the same time alone was granted.
222
Q

Qualified loan characteristics

A
  • meet the ability to repay rule: expected, income or assets, current employment status, mortgage payment, mortgage related obligations, current debt, alimony, child support, monthly debt to income ratio, residual, income, credit history
  • The mortgage is approved based on maximum monthly charges in the first five years
  • The loan should have no toxic loan features, which include: pay back longer than 30 years, negative amortization, payment option, interest, only payments, balloon payments, lender fees, total more than 3% of the loan
  • The borrowers debt to income ratio is no more than 43%. Divide monthly debt payments by gross monthly income.
223
Q

Disclosures and regulation Z

A
  • advertisements that state finance charge rate must be stated “annual percentage rate “using that term, rather than saying “APR “, if the annual percentage rate may be increased after the beginning of the mortgage, the address also state that.
  • if I add, includes any financing terms other than APR, all terms must also be disclosed
  • Can’t speak general financing terms, FHA financing available, if no specifics are mentioned
  • Must disclose within three days of loan application:
    APR must be written as annual percentage rate, amount, financed, the total health paid to principle and interest, Barros refinancing, or getting a new loan on a current home I speak, given the right to resend the loan after three days after closing the loan
224
Q

Requires disclosure of loan terms and costs

A

Truth in lending act

225
Q

Requires written disclosure of estimated settlement cost to the borrower

A

RESPA
Real estate settlement procedures act 1974

226
Q

Prohibits lenders from discriminating based on protected class

A

Equal credit, opportunity act

227
Q

Requires lenders to demonstrate they serve the community is low to moderate income housing needs

A

Community reinvestment act

228
Q

At what three points in time can the lender provide the disclosure statement to the borrower and still be within regulations?

A

At the time of the loan application
One day after the loan application
Up to three days after the loan application

229
Q

Which for disclosures does the truth in lending act require lenders to make? TILA regulation Z

A

Annual percentage rate
Total principal and interest to be paid towards the mortgage
Finance charge
Amount, financed

230
Q

What are TLA exemptions

A

Commercial and agricultural credit, such as a loan to buy an agricultural property for farming, purposes, exempt from TILA disclosure requirements.

T ILA applies to consumer loans

231
Q

Borrowers have the right to resend when it applies to refinancing, existing primary residence mortgage or new mortgages on an already on residence. What is the cut off?

A

Three days after the loan closing

232
Q

“Loans available at 5% annual percentage rate”
Permitted
Violation

A

Permitted

233
Q

“Get a VA guaranteed loan here. “
Permitted
Violation

A

Permitted general statements are permitted

234
Q

“Loans available at 5% annual percentage rate with zero down. “
Permitted
Violation

A

Violation, full disclosure of all terms is required, because something other than APR was mentioned

235
Q

“30 year mortgage available at 5% annual percentage rate with 1000 down “
Permitted
Violation

A

Violation, full disclosure of all terms is required

236
Q

For a good mortgage, call Mike
Permitted
Violation

A

Permitted

237
Q

What are toxic loan features?

A

40 year loan term, must be under 30 years
Lender points of 4% of loan value, must not be above 3%
Balloon payments
Non-amortized payments, must be amortized

238
Q

What are underwriting factors to qualifying mortgages?

A

Current income or salary
Employment status
Estimated mortgage payment
Other mortgage payments on the property
Taxes, interest, and insurance payments of the property

239
Q

Predatory lending

A

Lending that takes a vantage of the consumer by encouraging that, flipping loans to charge fees, making loans to and qualified buyers, not disclosing all fees, true nature of the loan obligation, including toxic loan features terms exceeding 30 years, negative amortization

240
Q

Subprime loan market

A

A loan that is offered at a rate above prime to individuals who don’t qualify for prime rates loans. High risk, borrowers, higher interest rates, higher fees, normally loan to poor credit.

Subprime borrowers often have : bad credit, low income, large loans, maxed out cards

Subprime = borrowers, who are not prime

Predatory lenders after work and subprime market, Sbarro should research their options before making a loan commitment

241
Q

What are predatory actions?

A

Encouraging that, giving a consumer loan, they can’t afford, encouraging of our to keep free financing to earn money from fees, disclosing only a portion of their fees to the borrower

These are not predatory
Selling a borrowers mortgage on the secondary market

242
Q

Subprime lender characteristics

A

Higher interest rates
Higher fees
Target, low, credit scores

243
Q

Debt ratios

A

**Monthly housing expenses to income ratio: ** future home $2800 a month for mortgage, monthly income $3500 equals not good , mortgage payment would be 80% of her income

total payment obligations to income ratio : car payment plus student loan plus credit card

Lenders want a lower ratio than 36%

244
Q

Lenders want to know the value of the property itself

A

Property appraisal: if appraised at $325,000, but sells for $300,000 it is appraise for $300,000

Loan-to-value ratio LTV : the primary lender, or the secondary mortgage market dictates these ratios= **loan amount, divided by the purchase price of the house*
$200,000 loan divided by purchase price $275,000 get 73% this is less than 80% cut off rate this qualifies

245
Q

What documents with a lender likely review to determine whether borrow is a good credit risk

A

Tax returns, W-2, paystub, bank statements

246
Q

California foreclosure methods

A

Judicial: does not contain a power of sale clause, less common with residential properties, with 1 to 4 units, involves court action, more expensive, takes longer, deficiency judgment may be sought
Non-judicial : more common in California, contains a power of sale clause, no court action, deficiency judgment may not be sought

247
Q

Judicial process

A

– Complete a notice of action is filed
– Summons served to all parties
– Lenders attorney, six a court order to forclose
– court orders that property may be sold
– Property is advertised and sheriff cell (auction) is held
– Property is sold to the highest bidder
– Application for deficiency judgment must be filed with the court within three months of sheriff sale

248
Q

Non-judicial process

A

– Mortgage servicer contacts borrow one default, occurs and offers foreclosure alternatives
– After state mandated 30 day, waiting period. The lender or trustee of records notice of default with the county clerk.
– At least three months after the notice of default is recorded, notice a sale can be published
– At least 20 days after the notice of sale is provided, property can be sold at trustee sale (auction)
– Property sold to the highest bidder

249
Q

What foreclosure method do lenders in California choose

A

Judicial a non-judicial

250
Q

Alternatives to foreclosure in California

A

Deed, in lieu of foreclosure – borrower surrenders, deed to lender, does not illuminate Junior liens, as foreclosure would.
Reinstatement or redemption - borrower pays all amounts owed, possibly entire loan amount. Must occur before the sheriff or trustee sale.
Short sale – borrower sells property for less than the loan balance plus closing cost. Lender must approve.
Bankruptcy – borrower goes through legal process to discharge or reconstructor their debts. Chapter 7 or chapter 13 bankruptcy filings are most commonly used by individuals.

251
Q

Borrower surrenders the deed to the lender

A

Deed in lieu

252
Q

Barbara pays all amounts and fees oh, possibly entire loan balance

A

Reinstatement

253
Q

Borrower sells property for less than the loan balance and closing cost, lender approval required

A

Short sale

254
Q

Lender restructures loan to terms more favorable for the buyer

A

Loan modification

255
Q

Borrower discharges are reconstructures all debts not just property loan

A

Bankruptcy

256
Q

A lender is preparing to begin foreclosure, proceedings. Rather than go through this proceeding, the borrower decides to turn over the deed to the property. What is this called?
Deed, in lieu of foreclosure
Default
Deficiency judgment
Redemption

A

Deed, in lieu of foreclosure

257
Q

Lenders examine a variety of documents to determine whether the buyer is a good risk for a loan, such as———-?
Genealogy report
Marriage certificate
Résumé
Tax returns

A

Tax returns

258
Q

A homeowner is behind on his mortgage. He decided to try to sell the property and is working with his lender to do so. He owes 315,000 on his home loan balance and closing costs. He has an offer for $300,000 which the lender approves. What is this an example of
Deed in Lieu of forclosure
Eviction
Redemption
Short sale

A

Short sale

259
Q

Which of the following is a type of subprime loan usually offer to consumers with insufficient or marginal, credit history?
Qualified mortgage with a safe Harbor
Qualified mortgage with rebuttable presumption
Qualified with the ability to repay
Qualified with cash

A

Qualified mortgage with rebuttable presumption
Exceeds average prime offer rate for a comparable mortgage loan

260
Q

Which percentage reflects the top debt to income ratio limit for qualified mortgage?

A

43% debt to income ratio is a firm limit

261
Q

Loans for——— purposes don’t require TILA disclosure

A

Business

262
Q

Which act was created to safeguard the consumer in the use of credit, by requiring full disclosure of the terms and conditions of that credit?
Community reinvestment act
Consumer credit protection act
Equal credit, opportunity act
Real estate settlement procedures act

A

Consumer credit protection act

263
Q

Which of the following is most susceptible to a predatory lender?
A borrower with poor credit
A Family
A minority
An investor

A

A borrower with poor credit

264
Q

Prepare for financing

A

Reduce that
Improve credit
Raise down payment
Research first time home buyer programs

265
Q

Home loan NFH program

A

Relationships with financial institute
Relationships of housing finance agency’s
Relationship with housing related entities

Does not offer direct financing, helps with programs

266
Q

Down payment tips

A

Roth IRA of at least five years, first time homebuyers can take out an amount that’s equal to the contributions they’ve made tax free and penalty free. They can withdraw even more as much as 10,000 be on their contributions without paying 10% penalty for early withdrawal.

Gift money to not go against the credit must be in the bank for at least six months to a year

I nonprofits such as churches, Fannie Mae has a 3/2 loan program, borrowers put just 3% down nonprofit ponies at the other 2%

267
Q

Potential sources of down payment funds

A

Buyer savings
Assistance program, such as churches nonprofit
Gifts from family or friends, aged is best six months to a year
Modify tax withholdings and put extra cash in savings W-4
Borrow from a retirement account

268
Q

Using Roth IRA money

A

Account must be open for at least five years

Funds are used for down payment, and closing costs only

The maximum for a home purchase is $10,000

269
Q

Debt reduction benefits

A

Improves credit
Improves debt to income ratio
Makes home ownership more affordable

270
Q

What do lenders want to see?

A

Two months cash reserves
Some credit cards open with room at least 33% on each card
Homeowners must have a HELOC home equity line of credit balance less than $50,000

271
Q

Reduction Caveats

A

Increase savings
Budget
Get funds from sources, other than your down payment
Two months cash reserves
Pay down credit card balances wisely
Use HELOC wisely

272
Q

Credit score versus credit report

A

Credit score - number
Credit report - credit history used to arrive at credit score. Free annually through annualcreditreport.com.

Credit bureaus, Equifax, Experian, Trans Union

273
Q

FICO

A

Used credit score
Based on the information obtained from three credit bureaus
Scores require
Six months of credit history
Credit history reported to a Credit bureau

Improve : pay bills on time avoid collection, don’t close accounts, turn open account just before applying for a loan, pay down total debt, pay down balance of multiple cards not just one. Don’t apply for a bunch of cards or loans, fewer credit poles.

274
Q

Number ranging from 300 to 850 that signifies credit risk

A

Credit score

275
Q

History of credit related actions, and inquiries, compiled based on the information provided by credit bureaus

A

Credit report

276
Q

FICO

A

Credit score

277
Q

Trans Union, Experian, and Equifax

A

Credit bureau

278
Q

Obtained, free annually, through annualcreditreport.com

A

Credit report

279
Q

Calculated based on the information provided by credit bureaus

A

Credit score

280
Q

FICO factors

A

Payment history
Amounts owed
Length of credit history
New credit
Types of credit and use

Joint accounts with marital status may affect all parties credit

281
Q

Loan processing – refer to the three C’s

A

Character – likelihood of fire, to repay the loan, based primarily on borrowers credit history
Capital – current assets, such as real estate, personal property, savings, and investments
Capacity Dash ability to handle the debt load, based on current income, current debts and expenses
Collateral – make sure underlying value exists

282
Q

Loan application

A

Loan prequalification’s

Loan preapproval - fees apply

283
Q

California residential lending process

A

Loan application
Loan processing
Underwriting analysis
Loan approval /disapproval

284
Q

The bar were kicks off the process by completing form 1003 and providing documentation

A

Loan application

285
Q

The lender gathers all the information needed to analyze the borrower and the property

A

Loan processing

286
Q

This individual crunches all the information about the borrower and property, and makes a recommendation

A

Underwriting analysis

287
Q

The loan committee makes the decision closing and funding could take place next

A

Loan approval/disapproval

288
Q

Loan processing

A

Character - willingness and desire to repay the loan
Capital – value of assets
Capacity – ability to repay a loan

Real Estate (39 decks)

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