Real Estate Financing

Question 1

Normally, bankruptcies and foreclosures in a borrower’s credit history must be older than

A)
seven to eight years.
B)
five to six years.
C)
three to four years.
D)
four to five year.

Answer 1

C)
three to four years.

Generally the lender wants to see that the applicant has reestablished a strong credit history since the financial breakdown. Three to four years meets that criteria.

Question 2

Which of the following statements about debt-to-income ratios for qualifying a buyer for a loan is TRUE?

A)
The two qualifying ratios for conventional loans are 26% and 38%.
B)
Conventional ratios are not dependent on the loan’s loan-to-value ratio.
C)
The two qualifying ratios for VA loans are 26% and 38%.
D)
FHA ratios are not dependent on the loan’s loan-to-value ratio.

Answer 2

D)
FHA ratios are not dependent on the loan’s loan-to-value ratio

Conventional loans are dependent on the loan’s loan-to-value ratio. The two qualifying ratios for conventional loan are 28% and 36%. VA loans use a 41% debt-to-income value and considers the borrower’s residual income.

Question 3

Which of the following factors are not included as recurring debt when a lender is qualifying a residential buyer for a conventional loan?

A)
Car payments
B)
Child support payments
C)
Medical bill payments
D)
Student loan payments

Answer 3

C)
Medical bill payments

Car payments, child support payments, and student loan payments are all recurring debt when qualifying a buyer.

Question 4

Which of the following statements about a borrower’s loan application is TRUE?

A)
The applicant must give the lender personal information, including employment history, earnings, assets, and financial obligations.
B)
If an application is denied and the applicant requests an explanation, the lender must provide an oral explanation of the reason for the denial, with copies of the credit report.
C)
Details about the property must be provided to the lender, including the seller’s name, legal description, improvements, title, survey, and taxes.
D)
Before deciding to grant the loan, the lender investigates the application information, including credit reports, credit scores, the applicant’s criminal history, and an appraisal of the property.

Answer 4

A)
The applicant must give the lender personal information, including employment history, earnings, assets, and financial obligations

If a loan application is denied, the lender must provide a written explanation as to the reason for denial. The applicant’s criminal history is not a factor considered by the lender. The lender does not need information about the mineral rights.

Question 5

Which of the following is NOT be acceptable on a brokerage company’s For Sale sign?

A)
For Sale by Brenda Baker, Broker. Sales Price $212,000
B)
For Sale~ABC Realty, payments of $1,200 a month!
C)
For Sale~ABC Realty, Great terms!
D)
For Sale~ABC Realty, HOA dues only $45 a month

Answer 5

B)
For Sale~ABC Realty, payments of $1,200 a month!

Regulation Z requires disclosure of all financing terms if anything other than APR or price is advertised.