SU # 45__Financing Alternatives Flashcards
Norm is buying a furnished condo in Chicago. Which type of mortgage is specifically designed for property and contents?
All Inclusive Mortgage
Package Mortgage
Short Sale Mortgage
Wrapped Mortgage
Package Mortgage
If a borrower in a VA-guaranteed loan defaults,
The VA takes over the property and makes payments to the lender on behalf of the borrower.
The VA reimburses the lender, up to the guaranteed amount, for losses not covered by foreclosure
proceeds.
The lender takes the property and also receives the amount guaranteed by the VA.
The VA must pay off the loan balance.
The VA reimburses the lender, up to the guaranteed amount, for losses not covered by foreclosure proceeds
What is the function of the index in an adjustable rate mortgage loan?
It is an amount added to the initial rate of the loan to increase the yield.
It is the starting point for calculating the interest rate for the loan.
It determines how much the interest rate of the loan may be adjusted periodically.
It is the underlying rate of return the lender plans to receive over the loan term.
It is the starting point for calculating the interest rate for the loan.
The feature of an adjustable rate loan that prevents the monthly payment during an adjustment period from varying up or down by more than a set amount is the
periodic cap.
aggregate cap.
payment cap.
negative amortization cap.
payment cap.
Interest rates on FHA loans are
set for each of 80 regions throughout the country.
determined by the prime rate plus a premium.
negotiated by lender and borrower.
set by statute and indexed to inflation.
negotiated by lender and borrower.
Why are interest rates generally higher on second loans than on first loans?
Lenders know that the borrower is desperate for cash.
Second loans are not insurable.
Second loans are riskier because they are not paid off until first loans are paid in case of default.
There is less demand for second loans.
Second loans are riskier because they are not paid off until first loans are paid in case of default.
A permanent long-term mortgage loan that is not government-backed is a
personal loan.
conventional loan.
primary loan.
commercial loan.
conventional loan.
Which of the following statements about contracts for deed in Illinois is TRUE?
They cannot have a term longer than 5 years.
If the buyer defaults at any point, the seller can cancel the contract, evict the tenant, and retain the property plus all payments.
If the buyer has a 20 percent equity in the property, the seller must convey title.
The seller cannot repossess the property without a judicial foreclosure if a defaulting buyer has 20 percent equity and the contract term is longer than five years.
The seller cannot repossess the property without a judicial foreclosure if a defaulting buyer has 20 percent equity and the contract term is longer than five years.
Buyer Jane has a loan which requires her to pay $588.00 per month for 20 years. At the end of the loan period, Jane has to make a final payment of $27, 580. What type of mortgage does Jane hold?
Straight Line Mortgage
Final Cap Mortgage
Balloon Mortgage
Adjustable Rate Mortgage
Balloon Mortgage
Which of the following is a feature of a fully-amortized loan?
It has the same payment amount every month.
It has a different payment amount every month.
At the end of the loan term, there is a remaining balance to be paid off.
A fixed amount of each monthly payment goes to the principal.
It has the same payment amount every month.
Which of the following best describes a reverse annuity mortgage?
The monthly payments on a loan decrease over the loan term, leaving a balance to be paid off at the end of the term.
A homeowner borrows an amount equal to the equity in her home, invests it, and pays part of the interest earned each month to the lender.
A homeowner’s equity is pledged as collateral for a loan paid out over time. The loan is repaid when the house is sold.
A homeowner buys an annuity and uses the interest from the annuity to pay off a mortgage loan.
A homeowner’s equity is pledged as collateral for a loan paid out over time. The loan is repaid when the house is sold.
Lenders use private mortgage insurance to
bring their loans into compliance with FHA requirements.
avoid charging origination fees.
increase their rate of return on a loan.
minimize their risk when accepting a loan with a low downpayment.
minimize their risk when accepting a loan with a low downpayment.
To be eligible for an FHA-insured loan, a property must be
no more than ten years old.
built by FHA-approved contractors.
under 2500 square feet in living area.
appraised by an FHA-approved appraiser.
appraised by an FHA-approved appraiser.
The basic FHA-insured loan program is provided for loans on
all residential properties.
all properties that are valued at under $1,000,000.
1-4-family residential properties.
all properties that have been refused as collateral by
conventional lenders.
1-4-family residential properties.
Owner Sam has a $75,000 mortgage on his home. Sam sells his home to Bill for $100,000. Bill pays $7,000 down and borrows $93,000 on a new mortgage. This mortgage includes the existing $75,000 mortgage because the new lender will make the payments on the old mortgage. This is an example of a what kind of loan?
Buydown
Straight Line
Wraparound
Blanket
Wraparound
