General - Chapter 9 Lesson 2

Question 1

Financing problems (two groups)

Answer 1

backed by fed gov and aren’t

Question 2

Conventional financing

Answer 2

doesn’t require gov backing, made to serve those who have established credit, saving, and low debt. Offered by priv mortgage lenders.

Question 3

Federal Housing Administration

Answer 3

created by National Housing Act of 1934 to help housing industry recover from Great Depression, part of HUD, insures loans made by approved lenders

Question 4

Loans for qualified vets are…

Answer 4

guaranteed by fed gov through Veterans Benefits Administration, part of Department of Veterans Affairs

Question 5

Qualifying standards for FHA-insured and VA-guaranteed are…

Answer 5

more flexible than conventional

Question 6

FHA requires a ____ down payment

Answer 6

3.5%

Question 7

down payment can be made from…

Answer 7

non-repayable gift

Question 8

Mutual Mortgage Insurance Plan

Answer 8

FHA’s insurance program

Question 9

for all FHA insured loans must pay

Answer 9

upfront mortgage insurance premium

Question 10

FHA insured loans, what’s added to monthly payment

Answer 10

annual MIP

Question 11

FHA prop requirments

Answer 11

property eligibility, occupancy, property conditions (appraised), and maximum mortgage amount

Question 12

VA-guaranteed loans are for…

Answer 12

eligible veterans who have been honorably discharged or are currently serving on active duty

Question 13

Unlike FHA, common for veteran to obtain VA-loan with no…

Answer 13

down payment

Question 14

primary requirement to be approved for VA loan is borrower’s…

Answer 14

military eligibility

Question 15

Lenders may not close VA loan without…

Answer 15

certificate of eligibility issued by the VA

Question 16

who else may be eligible for VA loan

Answer 16

spouses of veterans who died in active duty, MIA, or POW (if not remarried)

Question 17

Credit history

Answer 17

record of recent debts and debt repayment that details how a person has paid credit accounts in the past and whether there have been late payments

Question 18

Underwriter

Answer 18

An individual who evaluates a loan application to determine its risk level for a lender or an investor; the final decision maker on a loan application.

Question 20

Credit scoring

Answer 20

determining the creditworthiness of potential borrowers

Question 21

FICO

Answer 21

organization that summarizes a credit report into 3 digit number, FICO score, that many lenders use to consider the level of risk in providing a loan to a borrower

Question 22

What does a FICO score consider?

Answer 22

number of open accounts
total credit limit
types of credit
length of credit history
total amount of debt outstanding
number of late payments in the past 30, 60, 90
presence of adverse public records
number of recent credit inquiries
reestablishment of positive credit history after past payment problems

Question 23

tri-merged credit report

Answer 23

consolidates data from the three credit bureaus to provide single credit score

Question 24

Qualifying standards considered in underwriting

Answer 24

housing expense ration, total debt to income ratio

Question 25

Sable monthly income (considered initially)

Answer 25

income can reasonably expected to continue gross monthly income verifiable by borrower's employer and federal tax returns

Question 26

durable income

Answer 26

expected to continue for sustained period

Question 27

examples of durable income

Answer 27

bonuses, overtime, social security payments, retirement benefits, interest from investments, rental income, and child support

Question 28

housing expense ratio

Answer 28

relationship of the borrower's gross monthly income to their total monthly housing expense as %

Question 29

Ratio %=...

Answer 29

total housing expense/gross monthly income

Question 30

income adequate for a loan if total does not exceed ...% of stable monthly income

Answer 30

28

Question 31

Debt

Answer 31

any recurring monetary obligation that cannot be canceled

Question 32

total debt to income ratio

Answer 32

relationship of the borrower's total monthly debt obligation to income

Question 33

(D-I) Ratio %=...

Answer 33

total debt/gross monthly income

Question 34

to protect collateral lenders require...

Answer 34

buyer to purchase homeowner's hazard insurance

Question 35

hazard insurance

Answer 35

covers loss or damage to the property in the event of a fire or another disaster

Question 36

at settlement, the lender may require the buyer to...

Answer 36

prepay the premium for an annual policy in full or require buyer to pay into the escrow account a sum necessary to cover certain number of months

Question 37

Flood insurance

Answer 37

floods usually not covered, separate insurance for properties prone to flooding

Question 38

National Flood Insurance Program

Answer 38

for prop owners to purchase flood insurance as protection against flood losses (managed by FEMA)

Question 39

Building Coverage

Answer 39

includes plumbing and electrical systems, furnaces, water heaters, kitchen appliances, permanently installed built-ins, bookcases, cabinets, and paneling, carpets, foundations, detached garages, window blind, solar, and fuel takens

Question 40

Contents Coverage

Answer 40

furniture, clothing, electronics, curtains, washers and dryers, AC, microwaves, and valuables up to 2500

Question 41

Not covered

Answer 41

temp housing and living expenses prop outside insured building currency, certificates, and papers personal property in basements self-propelled vehicles damage from moisture, mildew, and mold if preventable

Question 42

personal credit report tracks individual's credit history for previous

Answer 42

seven years

Question 43

credit score below... may prohibit borrower from receiving a mortgage from conventional lender

Answer 43

650

Question 44

What determines the max loan amount on an FHA-insured loan?

Answer 44

no loan limit as long as the borrower qualifies

Question 45

how Is the interest rate for FHA-insured loan determined

Answer 45

negotiated between borrower and lender

Question 46

appraisal on an FHA-insured loan must be done by...

Answer 46

state-certified appraiser