Lesson 4: Loans

Question 1

Three types of loans:

Answer 1

FHA insured loans
VA guarantied loans
Conventional loans

Question 2

FHA

Answer 2

Federal Housing Administration

Question 3

Advantage and disadvantage of FHA loans

Answer 3

Low downpayment

Low loan maximum/limit

Question 4

Mortgage insurance premium (MIP)

Answer 4

A borrower getting an FHA loan is charged a Mortgage Insurance Premium (MIP), a fee used to pay operating expenses and to pay lenders any loss suffered because of a defaulted loan.

Question 5

Which FHA loans don’t require MIP?

Answer 5

Loans for condominiums and rehabilitated houses.

Question 6

What determines FHA interest rates?

Answer 6

FHA interest rates, and so discount points, are determined by the market.

Question 7

Who’s eligible for an FHA loan?

Answer 7

Anyone who has good credit, who has a sufficient income to qualify for the payment, and who can legally contract is eligible for an FHA loan.
People who are not U.S. citizens are also often
eligible.

Question 8

When is an FHA loan downpayment borrowing permitted?

Answer 8

Borrowing the down payment is permitted, however, if the loan for the down payment is secured by something besides household furniture, a car used to get to and from work, or tools of trade.