Vocabulary for Residential Loans for Investment and Taxation

Question 1

a certificate from the VA that established VA eligibility for a loan

Answer 1

Certificate of Eligibility

Question 2

a lump sum paid to liquidate a debt or paid anytime during a loan period

Answer 2

Balloon Payment

Question 3

a ratio that indicates what portion of an individual’s income is used to pay all long term debt

Answer 3

Back End Ratio

Question 4

a schedule of payments that will eventually extinguish the debt.

Answer 4

Amortization

Question 5

a residential lender is to verify that the borrower has the reasonable ability to repay the loan

Answer 5

Ability to Repay Rule

Question 6

VA appraisal stating the max VA guarantee on a loan

Answer 6

Certificate of Reasonable Value

Question 7

a federal law tha places regulations on financial institutions

Answer 7

Dodd-Frank Act

Question 8

lender’s right to call a loan’s entire balance, due upon resale of the property

Answer 8

Alienation

Question 9

an FHA appraisal based on a future loan commitment; property has qualified but borrower has not yet

Answer 9

Conditional Commitment

Question 10

a final statement that FHA will insure a specified loan

Answer 10

Firm Commitment

Question 11

home improvement loans for FHA

Answer 11

FHA Title 1

Question 12

residential home loan through FHA; 203B loan

Answer 12

FHA Title 2

Question 13

originally established by Fannie Mae

Answer 13

FHA Title 3

Question 14

FHA insures lenders against loss by requiring borrower to pay a mortgage insurance premium

Answer 14

FHA Loan

Question 15

Fair Isaac Company; calculates credit scores

Answer 15

FICO

Question 16

an appraisal concept which states that the SP of comparable properties set the lowest market rate

Answer 16

Floor Value

Question 17

a ratio that indicates what portion of an individuals income is used to make mortgage payment

Answer 17

Front End Ratio

Question 18

a fee paid to the VA to guarantee a VA loan

Answer 18

Funding Fee

Question 19

an amount held by a lender to pay taxes and insurance

Answer 19

Impound Account

Question 20

payment consists of interest only and no repayment on principal

Answer 20

Interest Only

Question 21

the amount of loan in relationship to property value (SP)

Answer 21

Loan to Value Ratio

Question 22

Mortgage Insurance Premium - Insurance pertaining to FHA loans

Answer 22

MIP

Question 23

private insurance for commercial loans that exceed a loan value ration of 80%; Private Mortgage Insurance

Answer 23

PMI

Question 24

in an adjustable rate loan, the amount added to the index to determine the rate

Answer 24

Margin

Question 25

Principal, Interest, Taxes, Insurance

Answer 25

PITI

Question 26

a home loan that meets certain standards set forth by government; will have met the ability to repay rule

Answer 26

Qualified Mortgage

Question 27

interest paid only on the unpaid principal balance

Answer 27

Simple Interest

Question 28

a mortgage which must be paid off in a specified period of time;

Answer 28

Term Loan

Question 29

VA will guarantee to the lender of funds a specific amount in case of default

Answer 29

VA Guarantee