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FL Real Estate Broker Coarse I > Financing Real Estate > Flashcards

Financing Real Estate Flashcards

1
Q

What are two important years in real estate history that led up to the crisis on Sept, 18th, 2008.

A

1978 - deregulated savings and loans (Dis-intermediation was occuring)

1995 - Laws passed to force banks to lend. Re-election year. Had some basis from the tax reform act of 1986.

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2
Q

What is a promissory Note

A

A promissory note is like a bond, interest bearing indebtness. - A promissory note is the legal evidence (personal liability) of the date, interest rate, and repayment schedule. It is usually not recorded to prevent raiding.

Note: a note ending on an even date means the mortgage and the note were signed on the same date.

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3
Q

What is a mortgage

A

A pledge of real property to secure a note.

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4
Q

What is an acceleration clause

A

A clause that allows the lender to call due the remaining loan balance if a buyer defaults.

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5
Q

What is a due-on-sale clause?

A

A specific type of acceleration clause which makes the entire loan due on the sale of real property. It is used to prevent someone from assuming the loan.

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6
Q

What is an exculpatory clause?

A

Is a clause that prevents a lender from going after a buyer personally and they can only look to the property for repayment if there is a default.

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7
Q

What is the difference between a title theory state and a lien theory state?

A

In a title theory state, title is transferred to the lender, not to the buyer upon purchase. When the loan is paid off the buyer gets title.

In a Lien Theory state, when a buyer purchases property with a mortgage they receive title right away. Florida is a Lien Theory state.

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8
Q

Which loan position do institutional lenders require they be in.

A

1st position. Only property taxes and special assessments having higher priority liens.

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9
Q

What is the sequence of priority for liens.

A

1) R. E. Taxes
2) Special Assessments
3) 1st mortgage
4) 2nd mortgage.

Note: Liens get their priority by the date and time they are recorded.

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10
Q

What is the difference between Sr. Liens, Jr. Liens, and Superior Liens?

A

Sr liens are older than Jr Liens.

Superior Liens take higher priority over all liens no matter when they were recorded. (Ex: R.E. Taxes, Special Assessment Liens, Federal Inheritage Tax(Death Tax)).

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11
Q

What is the homeowners protection act of 1998.

A

Law which became effective in 1999 which established rules for automatic termination and borrower cancellation of PMI.

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12
Q

What is a Conforming Loan

A

loan that meets all of Fannie Mae or Freddie Mac underwriting, appraising, and forms usage.

Non-Conforming Loans do not meet these standards.

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13
Q

What is an example of a Government Insured Loan vs a Guaranteed Mortgage Loan.

A

Government Insured Loan is FHA

Guaranteed Mortgage Loan is VA.

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14
Q

What is mortgage insurance used on FHA loans

A

MIP Mortgage Insurance Premium.

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15
Q

What is an FHA 203(b) loan

A

Is a residential loan. It is the most common.

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16
Q

What is an FHA 234(c) loan used for

A

FHA loan that insures for a condominium.

17
Q

What is an FHA 207 loan

A

Used for purchasing multifamily property 5 units or more.

18
Q

What is an FHA 235 loan

A

This is a low income FHA loan.

Section 8 is low income style housing.

19
Q

What are some stipulations to Assume a VA loan

A

VA loans are assumable however if created after March 1, 1988 the new borrower must qualify for the new loan.

20
Q

How do adjustable rate mortgages (ARM) allow people to get a higher mortgage?

A

The buyer only has to qualify for the teaser rate.

21
Q

How is the rate determined in an ARM?

A

rate is determined by adding a margin to a recognized index.

22
Q

What are annual caps vs lifetime caps in an ARM?

A

Annual caps are the maximum amount of rate increase allowed in a year. (typcially 2%)

Lifetime caps are teh maximum rate increase for the life of the loan. (I.E.Maximum 6% increase)

23
Q

What is a graduated payment mortgage

A

stair step mortgage that starts with lower payments and gradually gets more expensive. Good for Doctors or Lawyers who are just starting practice but know they will make big bucks over time.

24
Q

What is a blanket mortgage?

A

A blanket mortgage covers more than one parcel at a time. Used by developers/home builders.

A partial release clause is built into the mortgage so a developer con provide marketable title as lots sell.

25
Q

What is a reverse annuity mortage

A

reverse payments to the homeowner in exchange for equity in the property. Used by older people on fixed incomes.

26
Q

What is a package mortgage

A

A package mortgage contains real property and personal property.

27
Q

What is a contract for deed?

A

A buyer does not get the deed when the contract is signed. Once the buyer pays the balance owed only at that point will the deed be conveyed. very common in the acquisition of home sites and builders.

28
Q

What is the Truth-In-Lending Act and Regulation Z

A

expresses the true cost of borrowing expressed as an APR. Used to provide uniform disclosure of credit costs.

29
Q

If advertising mortgage info what must be included.

A

If detailing a mortgage amount if any detail is used all detail must be used. Call “Triggers”

Detail that must all be used together

  • downpayment amount
  • amount of payment
  • period of repayment
  • any finance charges
  • down payment amount
  • terms of repayment
  • APR

Some statements are general and do not require all disclosures. For Example:

  • No down payment
  • easy terms
  • biweekly payments.
30
Q

What are some of RESPA (Real Estate Settlement Procedures Act of 1974) rules.

A

Lender must provide the following when applying for a loan.

  • special information booklet - called Buying Your Home
  • provide a good faith estimate (GFE)
31
Q

Are kickbacks legal in Florida

A

Yes, so long as disclosed in writing except for 3 exceptions.

1) placement of a MTG
2) placement of title insurance
3) placement of homeowners insurance.

32
Q

What is the Housing Expense Ratio?

A

Housing Expense Ratio = Monthly HOUSING expenses DIVIDED BY Monthly Gross Income.

Suggested Ratios by loan type
Conventional 28%
FHA 31%
VA uses a different ratio (see Total Obligations Ratio)

33
Q

What is the Total Obligations Ratio?

A

Total Obligations Ratio = Total Monthly Obligations DIVIDED BY Monthly Gross Income.

Suggested Ratios by loan type:
Conventional 36%
FHA 43%
VA 41% (modified VA subtract total obligations from gross income - the remainder must exceed the table of residual incomes).

FL Real Estate Broker Coarse I (18 decks)

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