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Broker License > RE Finance Unit 5: Conventional, Insured, and Guaranteed Loans > Flashcards

RE Finance Unit 5: Conventional, Insured, and Guaranteed Loans Flashcards

1
Q

Adjustable-Rate Mortgage (ARM)

A

A variable-interest-rate loan

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2
Q

Automatic Rate Reduction

A

Loan interest rate reduces with clean payment record.

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3
Q

Loan Buydowns

A

Allows loans to be made at less-than-market interest rates by paying front-end discounts.

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4
Q

Cal-Vet

A

A special program for eligible California veterans to help them finance the purchase of farms and ranches within the state.

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5
Q

Certificate of Eligibility

A

Entitles qualified veteran to secure DVA-guaranteed home loans.

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6
Q

Certificate of Reasonable Value (CRV)

A

The appraised value of a property being pledged as collateral for a DVA-guaranteed loan.

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7
Q

Coinsurance

A

An FHA program that allows loan originators to directly underwrite housing project loans, shortening processing time considerably.

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8
Q

Conventional Loan

A

Any mortgage loan that is not insured or guaranteed by the government (such as under Federal Housing Administration, Department of Veterans Affairs, or Department of Agriculture loan programs). Conventional loans can be conforming or non-conforming.

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9
Q

Department of Veterans Affairs (DVA)

A

Administers home loans for eligible veterans.

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10
Q

Direct Endorsement Program

A

An FHA special program allowing eligible lenders the right to underwrite the loans that they create.

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11
Q

Entitlement

A

The amount of guarantee a veteran is eligible to secure on a DVA loan.

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12
Q

Federal Housing Administration (FHA)

A

Insures loans made by approved lenders to qualified borrowers in accordance with its regulations.

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13
Q

FHA 203(K)

A

Rehabilitation mortgage insurance.

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14
Q

Fixed-Rate Loan

A

The interest rate remains constant over the term of the loan.

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15
Q

Funding Fee

A

A front-end charge of 1% of the loan amount paid by the borrower when securing a DVA-guaranteed loan

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16
Q

Graduated Payment Mortgage (GPM)

A

Payments are adjustable.

17
Q

Home Equity Loan

A

Pledging the equity in a home for a loan

18
Q

Housing Ratio

A

Costs to pay housing expenses as a percent of gross monthly income.

19
Q

Interest-Only Loans

A

A term loan arrangement calling for payments of interest only, not including any amount for principle.

20
Q

Loan-to-Value (LTV) Ratio

A

The relationship between the amount of a mortgage loan and the value of the collateral property; expressed as a percentage.

21
Q

Mortgage Insurance

A

Insurance that protects the lender – not you – in the event that you fall behind on your payments.

22
Q

Mortgage Insurance Premium

A

Payment for an FHA or private mortgage insurance policy; can be paid in cash at closing or included in monthly payments.

23
Q

Negative Amortization

A

Loan balance increases as a result of less-than-interest-only payments.

24
Q

Novation

A

Full substitution of the original borrower by a new, qualified borrower; releases the original maker of the loan from all liability.

25
Q

National Housing Act

A

The Act that improved housing conditions, made mortgages more accessible and affordable, and reduced the foreclosure rate on homes during the Great Depression.

26
Q

Partial Entitlement

A

Under DVA loan, the amount of guarantee still available to an eligible veteran who has used a previous entitlement.

27
Q

Piggy-Back Loan

A

A second mortgage created simultaneously with a first mortgage.

28
Q

Predatory Lending

A

Loans issued at terms designed to bankrupt borrowers.

29
Q

Private Mortgage Insurance (PMI)

A

Mortgage insurance issued by private companies.

30
Q

Rehabilitation Loan

A

FHA 203(K) loan to repair a collateral house. Rehabilitation brings a property up to a satisfactory condition without changing its form, style, or architecture.

31
Q

Release of Liability

A

Removes old borrower from further responsibility for repayment of an assumed loan.

32
Q

Split Loan

A

In construction financing, covers the lot and building separately.

33
Q

Streamline Finance

A

FHA paper-reduction requirements.

34
Q

Subprime Loans

A

Borrowers have less than perfect credit, known as “B, C, or D paper.”

35
Q

Substitution of Entitlement

A

Replaces one eligible veteran with another on an existing DVA loan and restores entitlement to the original veteran.

36
Q

Tax-Exempt Bonds

A

Issued to finance public or private improvements for community benefit, interest from which may be exempt from federal, state, and local income taxes. Limited application under TRA ‘86.

37
Q

Total-Obligation Ratio

A

Total monthly payments as a percentage of gross monthly income.

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