Quiz 13 Types of Mortgages and Sources of Financing Flashcards
Which law requires lenders to disclose to buyers the true cost of obtaining credit so that the borrower can compare the costs of various lenders? A) TRID B) ECOA C) TIL D) HMDA
C) TIL
.___________________________ ensures that all consumers are given an equal chance to obtain credit. This doesn’t mean all consumers who apply for credit get it; factors such as income, expenses, debt, and credit history are considerations for creditworthiness.
A) The Equal Credit Opportunity Act (ECOA)
B) The Real Estate Settlement Procedures Act (RESPA)
C) The Truth in Lending Law
D) Regulation Z
A) The Equal Credit Opportunity Act (ECOA)
In making a home mortgage loan, a lender would consider all EXCEPT
A) other financial obligations of the borrower.
B) appraised value of the property pledged as security.
C) interest rate.
D) financial need of the borrower.
D) financial need of the borrower.
The lender is not interested in the financial need of the borrower.
Final payment of a mortgage loan that is considerably larger than the other monthly payments because the loan was not fully amortized describes a(n) A) wraparound mortgage. B) amortized mortgage. C) adjustable mortgage. D) balloon mortgage.
D) balloon mortgage.
The basic difference between an FHA and a VA loan is
A) FHA guarantees loans; VA insures them.
B) FHA insures loans, VA guarantees them.
C) both require 20% down payment.
D) FHA requires no down payment; VA requires 5% down payment.
B) FHA insures loans, VA guarantees them.
FHA insures loans, VA guarantees them.
The VA benefit from the Department of Veteran’s Affairs for a veteran approved home loan guarantees that
A) the veteran will make the scheduled payments.
B) the property cannot be foreclosed.
C) all loans made to veterans are affordable.
D) the loan, or a portion of it, made by an approved lending institution will be paid.
D) the loan, or a portion of it, made by an approved lending institution will be paid.
The Veterans Administration (VA) will guarantee that a loan made by an approved lending institution will be paid.
Which is NOT an agency that deals (buys loans) in the secondary market?
A) Government National Mortgage Association
B) Federal Home Loan Mortgage Corporation
C) Federal Housing Administration
D) Federal National Mortgage Association
C) Federal Housing Administration
The Federal Housing Administration does not lend money itself and does not buy loans in the secondary mortgage market.
Which mortgage allows a person to buy a home with no money down? A) Conventional insured B) Conventional C) FHA D) VA
D) VA
The basic intention of the VA direct home loan program is to supply home financing to eligible veterans in areas where private financing is not generally available and to help veterans purchase properties with no down payment.
Buyer Carr went to get an FHA loan because rates were significantly below the current market rate for conventional loans. The loan requires 3 discount points because it is below market rates. Which BEST describes this situation?
A) Points can be charged to either the buyer or seller.
B) Points can be charged only to the buyer.
C) Points can only be charged to the seller.
D) No points are allowed on an FHA loan.
A) Points can be charged to either the buyer or seller.
Lenders may charge points to increase their yield. Either the borrower, the seller, or both can pay them. Each point is 1% of the loan amount.
_________________ was created to stabilize the nation’s mortgage markets and expand opportunities for homeownership and affordable rental housing.
A) Government National Mortgage Association (GNMA)
B) The National Low Income Housing Coalition (NLIHC)
C) The Department of Housing and Urban Development (HUD)
D) The Department of Veteran’s Affairs (VA)
C) The Department of Housing and Urban Development (HUD)
According to the TRID rule, lenders must give a copy of which booklet to every person at the time of application for a loan? A) Your home loan toolkit B) Your credit history toolkit C) Your first home purchase toolkit D) Your home mortgage kit
A) Your home loan toolkit
Lenders must give a copy of the booklet, “Your home loan toolkit,” to every person at the time of application for a loan.
A lender generally charges discount points on an FHA loan to
A) provide greater interest yield to the investor.
B) provide a competitive rate.
C) fill the gap between the lender rate and the fixed rate.
D) increase the availability of loan funds.
A) provide greater interest yield to the investor.
Lenders may charge points to increase their yield.
Which of these organizations public mission and defining goal is to help more families achieve the American Dream of homeownership?
A) Government National Mortgage Association.
B) Federal National Mortgage Association.
C) The National Low Income Housing Coalition.
D) The Department of Veteran’s Affairs.
B) Federal National Mortgage Association.
The purpose of the Federal National Mortgage Association (FNMA) was to buy existing loans from banks, thus freeing up cash so that more loans could be made. The American dream of homeownership resulted from this agency’s ability to move money in the market.
A man had a loan for $60,000, and he had to pay 2.5 points. How much would he have to pay in cash? A) $150 B) $1,000 C) $1,500 D) $3,000
C) $1,500
A discount point equals 1% of the loan. $60,000 x .01 = $600 x 2.5 = $1,500.
For a veteran to obtain a VA loan, the VA must issue a certificate of A) eligibility. B) entitlement. C) endorsement. D) enterprise.
A) eligibility.
