Government Financing Programs

Question 1

FHA (Federal Housing Administration Financing)

Answer 1

created in 1934
Insures lenders that make loans more than 80% ofLTV
- Requires some sort of downpayment
- Puts in place limitations to make loans more friendly for borrowers.
- (Lower FICO requirements, higher debt to income ratios, and no pre-payment penalties.
- under 203b program, anyone qualifies or FHA financing as long as they purchase a primary residents

Question 2

Vetern Affairs Financing

Answer 2

Available for honorably discharged veterans

-No downpayment is required

Question 3

USDA Financing

Answer 3

United States Department of Agriculture offers loans, grants, and loan guarantee programs to low-and moderate-income, rural Americans who would like to purchase a home and/or farmland.

Question 4

Private Mortgage Insurance (PMI)

Answer 4

Version of FHA or VA financing. Insurance for the lender is provided by a private insurer rather than the government. Buyers make a down payment of less than 20%.
-must pay a monthly insurance premium on behalf of the lender until LTV dips below 78%

Question 5

Monetary Policy

Answer 5

Impact on the pricing availability of credit, and consumer purchasing power.

-Credit and purchasing power directly affect consumer demand

Question 6

Federal Reserve

Answer 6

Goal = maximize employment, stabilize prices, and moderate interest rates.
Overtime it has expanded to be the banks bank, when bank needs loan it goes to the Feds