Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
10 Cards in this Set
- Front
- Back
|
A loan requires monthly payments of both principal and interest, but leaves some of the principal to be paid off in a balloon payment at the end of the loan term. This loan is: |
With a partially amortized loan, not all of the principal is paid off through the monthly payments, and the borrower must take a balloon payment at the end of the loan term |
|
|
A lender will usually charge a higher interest rate in which of the following situations? |
With adjustable-rate loans, as a general rule, the longer the initial rate adjustment period, the higher the interest rate. The interest rate on a 5/1 ARM is not adjusted during the first five years, but may be adjusted annually after that |
|
|
A portfolio loan is a loan that: |
If a lender plans to keep a loan as an investment instead of selling it on the secondary market, the lender is keeping the loan "in portfolio." |
|
|
To compensate for the extra risk, a lender making a conventional loan with a high loan-to-value ratio: |
For a high-LTV conventional loan, many lenders apply stricter qualifying standards and charge a higher interest rate and load fees. Private mortgage insurance is generally required on any conventional loan with an LTV over 80% |
|
|
The Homeowners Protection Act requires: |
The Homeowners Protection Act requires lenders to send an annual notice to borrowers with PMI, regardless of whether their loans are subject to the other provisions of the act. (PMI must be canceled automatically when the principal balance reaches 78% of the home's original value, not 78%of the current appraised value.) |
|
|
All of the following factors might justify making a conventional loan when the borrower's income ratios exceed the standard benchmarks, except: |
If the borrower exceeds the income ratio guidelines, the lender may consider other factors that indicate the borrower will be able to make the monthly payments. A high loan-to-value ratio, however, means the borrower has less invested in the property and is more likely to default |
|
|
With a graduated payment buydown plan for a fixed-rated loan, what rate will a lender probably use to qualify the buyer for the loan? |
Because a buyer with a graduated payment buydown will eventually have to pay interest at the full note rate, the lender wants to make sure the buyer will be able to handle the increased monthly payments. As a result, the lender will usually qualify the borrower using the note rate |
|
|
Which of the following can the borrower count as part of the minimum cash investment required for an FHA loan? |
Discount points paid by the borrower do not count towards the required minimum cash investment, nor do the closing costs or prepaid expenses |
|
|
Jack, a veteran who wants to buy a house with a VA loan, has full guaranty entitlement. Which of the following is true? |
The VA guaranty covers only a portion of the loan amount. Even veterans who have full guaranty entitlement must meet the VA's qualifying standards in order to obtain a VA-guaranteed loan |
|
|
If a seller wants to help a prospective buyer qualify for an institutional loan, which of the following options may reduce the interest rate used to qualify the buyer? |
With a permanent buydown, the seller lowers the interest rate on the buyer's loan, which may allow the buyer to get a loan he would not otherwise qualify for. (A temporary buydown also lowers the buyer's interest rate for a certain period, but the buyer is likely to be qualified using the note rate instead of the bought-down rate.) |
