# Safe Flashcards Preview

## SAFE Exam > Safe > Flashcards

Flashcards in Safe Deck (64)
1
Q

PITI Payment

A

=Principal+Interest+Taxes+Insurance+HOA Fee’s (If applicable)

2
Q

Hourly GMI

A

=Hourly Rate x # hours worked x 52 / 12

3
Q

Weekly GMI

A

Weekly Rate x 52 / 12

4
Q

Bi-Weekly GMI

A

Rate of Pay x 26 / 12

5
Q

Semi-Monthly GMI

A

Rate of Pay x 24 / 12

6
Q

Annual GMI

A

Rate of Pay / 12

7
Q

Down Payment

A
```Appraised Value (or Purchase Price) x % Down
or Appraised Value (or Purchase Price) - Loan Amount```
8
Q

Loan-to-Value (LTV)

A

A percentage calculated by dividing the amount borrowed by the price or appraised value of the home to be purchased. The higher the LTV, the less cash a borrower is required to pay as down payment.

First Loan Amount / Value (Lowest Amount)

9
Q

Combined Loan-to-Value (CLTV or TLTV)

A

All Lien Balances / Value (Lowest Amount)

10
Q

High Combined Loan-to-Value (HCLTV)

A

Alternative: High Total Loan to Value (HTLTV)

11
Q

Front-End DTI (Debt-to-Income)

A

Equation: (PITI Payment / GMI) x 100

A percentage comparing a borrower’s total monthly cost to purchase a house— mortgage principal and interest, insurance, and real estate taxes—to monthly income before deductions. Also known as “housing ratio.”

12
Q

Back-End DTI (Debt-to-Income)

A

Equation: ((PITI+ Other Contractual Debts)/GMI) x 100

ratio that compares the total of all monthly debt payments (mortgage, real estate taxes and insurance, car loans, and other consumer loans) to gross monthly income.

13
Q

Amortization

A

Periodic payment on a loan requiring payment of principal and interest to ensure complete repayment of the loan by the loan term.

14
Q

Appraisal

A

Qualified appraiser giving an estimate of a properties fair market value based on recent sales of comparable homes in the area and the features of the property.

15
Q

Annual Percentage Rate (APR)

A

Measurement of the cost of credit including interest and other charges expressed as a yearly rate.

16
Q

A

Mortgage loan that does not have a fixed interest rate. Will change based on index.

17
Q

Closing

A

When parties involved in the transactions sign and indicate their commitment to the transaction.

18
Q

Closing Costs

A

Change to close the mortgage loan. Costs include loan originator fee’s, discount points, appraisal fee’s, title insurance, legal fee’s, and prepayment of taxes and insurance.

19
Q

4 C’s

A

Description: Ability to repay.

Capacity
Collateral
Credit
Capital

20
Q

Define the 4 C’s

A

Capacity- (DTI) Your present and future ability to meet your payment obligations
Collateral- Property or other asset offered to secure loan
Credit- (Financial Character) How responsibly you have paid bills or debt in the past.

21
Q

What is needed to pull a clients credit report?

A

(SAND) SSN#, Address, Name, Date of Birth

Also Permissible Purpose

22
Q

Name the 3 companies they pull a credit score from?

A

Experian, Transunion, and Equifax

23
Q

What credit score you you use after you pulled the reports?

A

Middle Score

24
Q

Loan Officer

A

A representative of a lending or
mortgage company who is responsible for soliciting
homebuyers, and qualifying and processing loans.
Also known as a “lender,” “loan representative,”
“account executive,” or “loan rep.”

25
Q

Consumer Financial Protection Bureau (CFPB)

A

Created the HLTK and regulating authority for consumers financial protections. Put in place to empower clients to make informed decisions and protect clients.

26
Q

Home Loan Toolkit (HLTK)

A

Created for clients purchasing a home so they are more informed of the process and can use I to determine affordability when purchasing a home. Informs the client of what to expect during the process of buying a home.

27
Q

Purchase

A

This is a mortgage that allows you to buy your home. Usually a down payment is required, but not always.

28
Q

Refinance

A

When the borrower replaces an existing loan or debt obligation with a new obligation under different terms.

29
Q

What are the 2 types of Refinance? Explain each one

A
• Rate/Term- Lower rate and/or extend or shorten the term. Longer Term=Smaller payment, Shorter Term=Larger Payment.
• Cash Out- Take cash out of the equity in the home and it rolls into the new PITI payment.
30
Q

Difference between Gross and Net:

A

Gross=Pre-Tax

Net=Post-Tax

31
Q

List/Describe the Pay Documentation:

A
1. Pay Stubs – Hourly and Salary
2. W2s – Hourly and Salary
3. 1099s—Independent Contractors
4. Tax Returns – Self Employed and/or Commission
5. Award Letters – Passive Income
6. 4506-C – All Pay Classifications; amount is determined by the type. The 4506-T is a request form sent to the IRS requesting copies of past tax returns. Emphasize the importance.
7. VOE – Verification Of Employment which is completed by our Vendor team
32
Q

Capital Aka Cash/Assets: Must be T.A.N. Describe T.A.N.

A

Tracible
Accessible
Not a Liability/Loan

33
Q

Reserve must be at least ______ times the PITI payment in an account at and after the closing

A

2

34
Q

Equity

A

An owner’s financial interest in a property

35
Q

Equation for Equity

A

= Home’s Value-Loan Balance

36
Q

Collateral

A

Security in the form of property pledged for the payment of a loan.

37
Q

Security Instrument

A

Document that pledges the collateral as security for repayment of a debt.

38
Q

Closed end loans

A

Pay off date is known at the time of closing

39
Q

Open end loans

A

We don’t know when the pay off date is at the time of closing

40
Q

What do you need for a completed application?

A
```Address of subject property
Loan Amount
Income
Estimated Value
Name
SSN#```
41
Q

What does an completed application trigger?

A

Initial Disclosure

42
Q

What is a conventional loan?

A

Not backed or insured by the government, Given out by private companies.

43
Q

What is a non-conventional loan?

A

Backed by the government.

44
Q

What are the 3 governmental programs?

A

VA- Veteran Affairs
USDA- : US Department of Agriculture

45
Q

What one of the 3 governmental program requires Mortgage Insurance Premium (MIP)?

A

FHA

46
Q

Fixed Rate Mortgages

A

Interest rate is fixed throughout the life of the loan. Principal & Interest stays same. Taxes and Insurance still may change, so therefore overall PITI could still change.

47
Q

A

Interest rate adjusts throughout the life of the loan. Lower rates than fixed rate loans initially.

48
Q

ARM loans are made up of what interest rate?

A

Fully Indexed Rate

49
Q

What’s the equation for Fully Indexed Rate?

A

Margin + Index

50
Q

What is Margin?

A

The lowest point the rate can go. It is the lender’s profit. It stays the same throughout the life of the loan.

51
Q

Index

A

Fluctuates based on the market.

52
Q

Name 2 risky features:

A

Balloon Payment and Prepayment Penalty

53
Q

What is a Balloon Payment?

A

A large payment on your mortgage at a specified time, at least 2 times the PITI

54
Q

What is a Prepayment Penalty?

A

A fee charged for paying off your loan too early, so the lender doesn’t miss out on profit from interest.

55
Q

What does 1 point equal?

A

56
Q

What are the 2 programs in conventional loans?

A

Conforming and non-conforming

57
Q

Loan Estimate

A

Disclosure that gives clients an estimate of their loan costs

58
Q

What does page 1 of the loan estimate contain?

A

stuff

59
Q

What is a deed?

A

Deed is the documentation that shows real ownership

60
Q

What does title mean?

A

Ownership of the house (Need deed to prove ownership)

61
Q

What are the 3 things Closing Agents are in charge of?

A
1. Executing legal documents
2. Closes loan
3. Handles money
62
Q

Right to Rescind

A

Buyer can cancel loan only 3 business days after closing. Only applies to refinancing primary residence and reverse mortgages

63
Q

How many pages makes up the loan estimate?

A

3

64
Q

What does page 2 of the loan estimate contain?

A

sruff