Financing in California flashcards

Question 1

Hey mom, who’s principal and interest payment remains the same over the life of the loan

Answer 1

Fixed rate loan

Question 2

A loan whose rate is adjusted, usually annually, based on the behavior of the economic index with which it is associated

Answer 2

Adjustable rate mortgage

Question 3

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

Answer 3

Bridge loan

Question 4

The loan of equity in a property to purchase another property

Answer 4

Swing loan

Question 5

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

Answer 5

Graduated payment mortgage

Question 6

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

Answer 6

Growing equity mortgage

Question 7

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

Answer 7

Reverse mortgage

Question 8

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

Answer 8

Renegotiable rate mortgage

Question 9

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

Answer 9

Roll over mortgage

Question 10

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

Answer 10

Shared appreciation mortgage

Question 11

What is the best case scenario with a debt to income ratio?

Answer 11

20% debt to income
Do you want low debt, and higher income?

Question 12

What are the three C’s of credit?

Answer 12

Character, capital, capacity

Question 13

The three companies that truck credit lenders are Trans Union, Equifax, and experience. Which of the following is a true statement.

Each company uses a slightly different scoring system
Each company post the borrowers Phico score
Scoring is consistent across three companies
The higher, the score of the higher, the credit risk

Answer 13

Each company uses a slightly different scoring system. The system used by each credit bureau varies.

Question 14

Ibarra’s credit history and willingness and desire to repay a loan are elements of what C of credit

Answer 14

Character

Question 15

Ping down, your credit cards is a great idea to reduce debt, but it can backfire. In the eyes of the lender, which action is the least damaging to loan qualifications?

Keeping a high balance card, and having several cards with nothing charge to them
Paying off several cards and canceling them
Several open cards with available credit on them

Answer 15

Several open cards with available credit on them

Question 16

Improving credit score can also———-

Increase credit risk for the lender
Increase how much how’s the borrower can afford
Increased risk for borrower
Lower the borrowers FICO score

Answer 16

Increase how much how’s the borrower can afford

Question 17

Some first time homebuyers tap into the bank of mom and dad. In what circumstances with the parents contribution be acceptable for loan qualifications?

Hey Blume, payment must not apply for the first three years
Interest rates, for the loan must not exceed 3%
The borrower receives cash at closing
The money is given as a gift with no expectation of repayment

Answer 17

The money is given as a gift with no expectation of repayment

Question 18

Roth IRA rules state that a first time homebuyer can withdraw funds with no penalties from a Roth IRA under which condition

Answer 18

Account has been open for five years or longer