Session 7 AZ Real Estate Principles & Practices

Question 1

FHA Loan Programs-

• FHA 203(b)
• FHA 203(k)

Answer 1

203b = basic fixed rate loan

203k = finances both repair and purchase of damaged properties

Question 2

FHA Insured Loans

• Borrower Eligibility

Answer 2

US Citizen, permanent resident

Non permanent resident with qualifying work visa

Question 3

Conventional Loan

Answer 3

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

Question 4

Default

Answer 4

Failure to fulfill an obligation, duty or promise.

Question 5

FHA - Insured Loan

Answer 5

A mortgage loan insured by the federal housing administration that protects the lender against losses from default

Question 6

Loan-to-Value (LTV)

Answer 6

The amount of money borrowed, compared to the value (or price) of the property, expressed as a percentage.

Question 7

Mortgage insurance premium (MIP)

Answer 7

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).

Question 8

Private mortgage Insurance (PMI)

Answer 8

Insurance offered by private companies to insure a lender against a borrowers default on a loan.

Question 9

VA - Guaranteed Loan

Answer 9

A guaranteed loan made to eligible veterans for the purchase or construction of a home.

Question 10

Loan estimate

Answer 10

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.

Question 11

Real estate settlement procedures act RESPA

Answer 11

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.

Question 12

Rescission

Answer 12

The annulment have a contract by mutual consent of the parties. Verb form: to rescind.

Question 13

TRID Rule

Answer 13

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.

Question 14

Trigger Terms

Answer 14

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

Question 15

Truth in lending act (TILA)

Answer 15

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.

Question 16

Annual percentage rate APR

Answer 16

The relationship between the cost of borrowing and the total amount financed, represented as a percentage

Question 17

Conventional Loan

Answer 17

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.

Question 18

Debt Ratio

Answer 18

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

Question 19

VA Guaranteed Loan

Answer 19

A guaranteed loan made to eligible veterans for the purchase or construction of a home

Question 20

Truth-in-lending act (TILA)

Answer 20

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.

Question 21

FICO Score

Answer 21

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.

Question 22

Discount point

Answer 22

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.

Question 23

Income ratio

Answer 23

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.

Question 24

Interest

Answer 24

A charge a borrower pays to a lender for the use of the lender’s money.

Question 25

Principal

Answer 25

The amount of a debt, excluding interest due.

Question 26

Servicing

Answer 26

The ongoing process of collecting payments, keeping records, and handling defaults for loans.