General Mortgage Knowledge Flashcards
What type of loan would commonly use an extended rate lock?
new construction
Construction to permanent loans
allow for a cash-out in a two-time close if the equity exists.
A conforming loan
follows the secondary market criteria set by Fannie Mae/Freddie Mac.
Conforming loans follow the underwriting guidelines of
Fannie Mae and Freddie Mac.
The income housing expense and total debt-to-income ratios for conventional conforming loans are
28% and 36%.
Mortgage loans offered through FHA, VA, and USDA Section 502 programs are referred to as what type of loan?
non-conventional
When construction is complete, the appraiser verifies that plans and specifications have been met and the original opinion of value is valid; the loan is then replaced by a permanent amortizing loan, often called a
take-out loan.
A VA-guaranteed loan is to be assumed by another eligible veteran and the current borrower released of liability. Which statement about the assuming buyer is FALSE?
The buyer cannot hold the veteran who sells the property secondarily liable.
Under the conditions for a loan to be a general qualified mortgage, lenders must verify that the borrower has the ability to repay the loan and must retain the information used in the ability to repay analysis for how many years after loan consummation?
3
A borrower’s income is considered adequate for a conventional conforming mortgage loan if the proposed payment of principal, interest, taxes, and insurance (PITI) does NOT exceed what percentage of stable monthly income?
28%
The difference between the index value and the fully indexed rate on an adjustable-rate mortgage (ARM) is called a
margin.
What formula is used to determine how much lenders are willing to loan on a given property based on the value of the property?
Loan Amount / Lesser of Sale Price or Appraised Value
A security instrument that places into the hands of a disinterested third party a specific financial interest in the title to real property as security for the payment of a note is a(n)
trust deed.
Which of the following loan provides a “safe harbor” for mortgage lenders from liability if the loans are not also higher-priced?
qualified
The Federal National Mortgage Association is also known as
Fannie Mae.
Desktop Underwriter® is the industry-leading underwriting system that helps lenders efficiently complete credit risk assessments to establish a home loan’s eligibility for sale and delivery to
Fannie Mae.
A mortgage loan, typically a second mortgage, that has a predetermined maximum loan amount, has an adjustable rate, can be borrowed against and paid off as needed, and has an interest-only minimum monthly payment, is known as a
home equity line of credit.
The relationship between the cost of borrowing and the total amount financed, represented as a percentage, is known as
the APR.
All of the following statements are TRUE about an interest-only mortgage EXCEPT
Borrowers are not free to make payments toward the principal balance at any time during the mortgage term
A loan that is amortized over 30 years with the balance due in 15 years is known as a(n)
Balloon Mortgage
With a(n) ____ mortgage, a borrower only pays the interest on the loan for a certain period of time or throughout the duration of the loan.
Interest only
What term is best described as when a seller extends credit to a buyer to finance the purchase of the property?
Seller financing
What is the type of loan where a seller may finance all or part of the sale of property for the buyer?
Purchase money mortgage
Under a one-time construction close that has taken more than ___ to be completed, FNMA will require that the borrower pay a rate lock extension fee.
4 months