Real Estate Course Chapter 12 Flashcards
True or False: The Federal Housing Administration (FHA) regulates interest rates.
FALSE
True or False: Florida statute requires mortgagees to send the recorded satisfaction to mortgagors within 60 days
TRUE
True or False: A deed in lieu of foreclosure is sometimes referred to as a friendly foreclosure.
TRUE
True or False: A contract for deed is a method of buying a property in a single lump sum.
The statement is FALSE. A contract for deed is a method for buying real property, usually with very little cash investment. The seller accepts a down payment from the buyer and finances the rest of the purchase price.
True or False: The primary appeal of an adjustable-rate mortgage (ARM) is a lower interest rate over the life of the loan.
FALSE. An ARM offers a lower initial interest rate, but over the life of the loan an ARM’s rate can rise considerably higher than the initial rate.
True or False: Borrowers are charged a mortgage insurance premium for a VA loan.
The statement is FALSE. The VA does not charge a mortgage insurance premium; however, the borrower is charged a funding fee or user’s fee to help the government defray the cost of foreclosures.
True or False: FHA mortgages typically have a higher loan-to-value (LTV) ratio compared with conventional mortgages.
True
True or False: The VA uses a total monthly obligations ratio of 39 percent to qualify loan applicants.
The statement is FALSE. The VA uses a total monthly obligations ratio of 41 percent to qualify loan applicants
True or False: In a mortgage, the mortgagor owns the mortgage, while the mortgagee owns the property.
The statement is FALSE. The opposite is true: the mortgagor owns the property, while the mortgagee owns the mortgage
True or False: The open-end clause permits the borrower to increase the loan amount as long as the total debt does NOT exceed the original amount of the loan.
A)
True
The statement is TRUE. The borrower may increase the loan amount under the open-end clause, but only if the total debt does not exceed the original amount of the loan
At closing the seller retains legal title to the property. The buyer receives equitable title and a promise that the buyer will receive title to the property at a later date. What type of instrument has been executed?
The answer is LAND CONTRACT. A land contract (or contract for deed) is a special arrangement that can be used when the buyer has little down payment. Title to the real property remains with the seller. The buyer receives equitable (legal) interest in the property.
Which mortgage plan is BEST suited to people who expect significant increases in income within the next few years?
The answer is GROWING-EQUITY. A growing-equity mortgage rapidly increases the equity in a property by increasing the monthly payments by a certain percentage each year and applying the increases to the principal.
Which mortgage clause allows another mortgage created at a later date to take priority?
SUBORDINATION CLAUSE. A subordination clause provides that the lender (usually the seller) voluntarily will allow a subsequent mortgage to take priority over the lender’s otherwise superior mortgage (the act of yielding priority).
What is Florida’s equitable right of redemption?
A BORROWER WHO IS IN DEFAULT, PRIOR TO FORECLOSURE, HAS THE RIGHT TO REPAY THE AMOUNT OWED PLUS INTEREST TO PREVENT FORECLOSURE.
A prospective borrower has an estimated monthly housing expense of $900. The borrower’s total monthly obligations are $1,200. Monthly gross income totals $2,950. What is the total obligations ratio? (Round to nearest percent.)
The answer is 41 PERCENT. The solution is: $1,200 total monthly obligations ÷ $2,950 monthly gross income = .4067 or 40.67% or 41% (rounded to the nearest percent).
