Session 7 AZ Real Estate Principles & Practices Flashcards
FHA Loan Programs-
- FHA 203(b)
- FHA 203(k)
203b = basic fixed rate loan
203k = finances both repair and purchase of damaged properties
FHA Insured Loans
• Borrower Eligibility
US Citizen, permanent resident
Non permanent resident with qualifying work visa
Conventional Loan
A loan made by an institutional lender or a private party with real estate as security for the loan that the government either guarantees nor insures
Default
Failure to fulfill an obligation, duty or promise.
FHA - Insured Loan
A mortgage loan insured by the federal housing administration that protects the lender against losses from default
Loan-to-Value (LTV)
The amount of money borrowed, compared to the value (or price) of the property, expressed as a percentage.
Mortgage insurance premium (MIP)
The fee charged for FHA mortgage Insirance coverage. Initial premium can be financed and ther is a monthly premium. Also called: upfront mortgage I stranded premium (UPMIP).
Private mortgage Insurance (PMI)
Insurance offered by private companies to insure a lender against a borrowers default on a loan.
VA - Guaranteed Loan
A guaranteed loan made to eligible veterans for the purchase or construction of a home.
Loan estimate
A lender disclosure containing a good faith estimate of closing costs, loan terms, and the costs that the borrower must pay for a real estate loan, including the annual percentage rate APR. The lender must give this to the bar we’re within three business days of a completed loan application. Required by Raspados and the truth in lending act for all federally related residential transactions.
Real estate settlement procedures act RESPA
Federal law dealing with real estate closings that provide specific procedures and guidelines for the disclosure of settlement costs. Implement implemented by regulation acts, which is under the oversight of the consumer financial protection bureau.
Rescission
The annulment have a contract by mutual consent of the parties. Verb form: to rescind.
TRID Rule
The TILA-RESPA integrated disclosure rule, issued by the consumer financial protection bureau to create standardized, consumer-friendly disclosure documents, including the loan estimate and the closing disclosure.
Trigger Terms
A word or phrase that describes alone, including the down payment, terms, and monthly payment. If an ad use as a trigger term, additional disclosures are required to comply with the truth in lending act
Truth in lending act (TILA)
Federal law that requires disclosure of the terms of credit by a creditor to a perspective borrower. Implemented by regulation Z, which is under the oversight of the consumer financial protection bureau.
Annual percentage rate APR
The relationship between the cost of borrowing and the total amount financed, represented as a percentage
Conventional Loan
Alone made by an institutional lender or a private party with real estate as security for the loan that the government neither guarantees nor insures.
Debt Ratio
The relationship of a borrowers total monthly debt obligations, including housing and long-term debts with 10 or more payments remaining, to income, expressed as a percentage (total debt / income = ratio %) also Called: debt to income ratio, or back end ratio
VA Guaranteed Loan
A guaranteed loan made to eligible veterans for the purchase or construction of a home
Truth-in-lending act (TILA)
Federal law that requires disclosure of the terms of credit by a creditor to prospective borrower. Implemented by regulation Z, which is under the oversight of the consumer financial protection bureau.
FICO Score
A credit scoring system where a. I’m we from 300-850 is assigned to a consumers credit histoey. The lower the score, the greater the risk of default. Generally, above 660 is an acceptable risk, 620-660!8/!- marginal risk, below 620 is a high risk.
Discount point
An added loan fee charged by a lender to increase the yield on a lower than market interest rate loan and make it competitive with other higher interst loans. One point equals one percent of the loan amount. Every point that the lender received will increase their return by approximately 1/8 if one percent.
Income ratio
The relationship of a borrowers total monthly housing expense to gross monthly income, expressed as a percentage (total housing expense / income = ratio%) also called housing expense ratio or front end ratio.
Interest
A charge a borrower pays to a lender for the use of the lender’s money.
Principal
The amount of a debt, excluding interest due.
Servicing
The ongoing process of collecting payments, keeping records, and handling defaults for loans.
