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NMLS Exam > Govt backed loan programs > Flashcards

Govt backed loan programs Flashcards

1
Q

FHA Loan Features

A

Large insurer of mortgage loans
- Has 2 types of mortgage insurance premiums
-Anyone is eligible
-No prepayment penalties
-Max seller concession is 6%

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2
Q

FHA MIP’s

A
  1. Up front mortgage insurance premium
  2. Annual MIP
    - Stays on loans greater then 90% LTV
    -Under 90 stay on for 11 years
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3
Q

What is qualifying ratio for FHA

A

31%/43%

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4
Q

VA Loan

A

Made my lenders and guaranteed by VA , backed in secondary market by GNMA

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5
Q

What is COE and how do you obtain it?

A

Certificate of eligibility verifies that you are eligible for VA loan
-Need DD214 to obtain and it tells amt of GUARANTEE

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6
Q

What is Guarantee?

A

Based on when, how, branch of service and discharge
- Guarantee for lender in case borrower defaults

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7
Q

What is the max guarantee for borrowers with full entitlement?

A

25% of the loan amount

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8
Q

What form does lender use to verify active duty service members income

A

Leave and Earnings statement (les)

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9
Q

What is the max origination fee lender can charge vet on VA loan ?

A

1%

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10
Q

What is the minimum investment on a VA loan ?

A

0% - 100% financing available

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11
Q

What is NOV

A

Notice of Value - VA appraisal

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12
Q

IRRRL

A

Va streamline refinance - interest rate reduction refinance loan
- has upfront funding fee of 2.15% for active duty/reserve

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13
Q

What is the late fee for VA loan

A

4% of the principal and interest payment

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14
Q

What does it mean that VA loans are assumable?

A

Means you don’t have to be a veteran

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15
Q

What is the VA qualifying ratio

A

Qualifying ratio is 41%

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16
Q

How much can sellers contribute on VA loan

A

-Sellers can contribute up to 4%

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17
Q

Does a VA loan require mortgage insurance

A

No

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18
Q

What is a USDA loan and its terms

A

Us department of agriculture - guaranteed rural housing program
-100% financing
-Only offered in rural areas with 35k or less
-Offered as 30 year fixed rate owner occupied loan

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19
Q

What is the guarantee fee on a USDA loan

A

1%

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20
Q

What is max seller contribution on USDA loan?

A

6%

21
Q

What is ARM loan

A

Loan where interest rate increases or decreases over life of loan
- Tied to an index

22
Q

What is an index in an ARM

A

Benchmark interest rate that reflects general market conditions

23
Q

What is a margin in an ARM

A

a number set by lender when you apply for a loan and never changes

24
Q

What happens when you add index and margin

A

Becomes interest rate after initial rate expires

25
Q

What is start rate ?

A

Low intro rate

26
Q

What is teaser period?

A

How long loan is fixed at the start rate

27
Q

What is SOFR price index

A

secured overnight financing rate

28
Q

What is COFI price index

A

Cost of funds index

29
Q

What is MTA price index

A

Monthly treasury average

30
Q

What is t-bill

A

treasury bill

31
Q

What is CMT

A

Constant maturity treasury

32
Q

How to calculate fully index rate on ARM

A

Margin + index = fully indexed rate

33
Q

What does a 5/1 ARM mean

A

5 = numbers of years fixed (teaser period)
1 = adjusts annually

34
Q

What is CAPS

A

Protection -on how much an ARM can adjust
-adjustment period cap
-life of loan cap

35
Q

Ex of caps 2%/6%

A

2 reps how much loan can adjust in any adj period
6 how much loan may adjust over its life when added to start rate

36
Q

2/1/6 caps

A

2 - first adjustment max
-1 reps all other adj periods
6 - max adj over term of loan when added to start rate

37
Q

Ex ARM question A borrower takes out a 7/1 ARM with 2%/1%/6% caps and a start rate of 3.5%. The margin is 4% and the loan is for $200,000 on a 30 year term. The index is based on the SOFR.
1. What is the Maximum rate this borrower will ever see?
2.When this loan starts adjusting, how many times will this loan adjust in a 12 month period
3.If at the 1st adjustment period the current SOFR is at 7%. What will the rate adjust to for this borrower’s loan?
4If the next Adjustment Period the SOFR was 5% - what is the max the rate could adjust to on this loan?

A
  1. 9.5% (take max cap and add to start rate)
  2. once annually
    3.M + I = R*
    * Always know what the current rate is prior to making a final calculation as well as check all caps!
    4 + 7 = 11 ! Current Rate is 3.5% (we can only go up 2% in first adj period ) new rate is 5.5%
    4.M + I = R
    4 + 5 = 9 however, we can only go up 1% for all future adjustments because the CAPS are 2/1/6 this makes the answer 6.5% (because you may only adjust 1% after the first adjustment period is over)
38
Q

What is variable rate mortgage

A

Has more then 1 fixed rate

39
Q

Balloon Mortgage

A

Loans that don’t full amortize
- provide lower rate and payment

40
Q

What is min term on a balloon

A

5 years

41
Q

HECM -Reverse mortgage

A

Home equity conversion mortgage
-must be 62 years old
LTv is based on age
-Must demonstrate ability to pay taxes and insurance on property

42
Q

What are 3 ways to get money for HECM

A

Lump sum, monthly and home equity line of credit

43
Q

When do borrowers need to start repaying HECM?

A

No until death - heir can refi or sell - have 12 months

44
Q

What is the borrower of a HECM loan required to pay?
A. Principal
B. Interest
C. Mortgage Insurance
D. HOA and Real Estate Taxes and Insurance

A

d.

45
Q

Construction Loan

A

Financing taken in chunks to finance construction of a new home.

46
Q

How do you certify completion of construction loan property

A

Appraiser must visit property and complete 442 for fhlmc or 1004d for fnma

47
Q

A Construction loan requires payment of:
a.) Interest only
b.) P and I
c.) PITI
d.) Monthly admin fee

A

a.

48
Q

What is a blanked loan?

A

A loan that encumbers multiple properties

49
Q

What is a bridge loan

A

Low ltv, cash out , no payment for 6-12 months
-Accumulates interest

NMLS Exam (20 decks)

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