unit 3

Question 1

The amount of money that a lender charges for the use of money is …. - always expressed as a percentage per year.

Answer 1

interest

Question 2

… Interest - charged on a mortgage loan.

Answer 2

Simple

Question 3

…. interest - loan balance

Answer 3

Principal

Question 4

• the total dollar amount of interest and points paid by a borrower at closing.

Answer 4

Prepaid interest

Question 5

….. are a one-time fee paid at closing to increase the yield to the investor.

Answer 5

Points

Question 6

…… is the principal of using other people’s money to make investments. The lower the down payment, the higher the risk to lender. The lower the down payment the higher the “leverage” obtained by the borrower.

Answer 6

Leverage

Question 7

The ratio of loan amount compared to the value of the property is called the…

Answer 7

Loan to Value Ratio.

Question 8

The value in a property held by the owner in excess of any liens against it is called …

Answer 8

equity.

Question 9

A …. is the cost per thousand that is required to create the principal and interest payment necessary to pay off the loan.

Answer 9

factor

Question 10

If a borrower purchases a property for $200,000, and borrows $160,000 they are said to have a LTV ratio of?

Answer 10

80%

Question 11

A buyer got a 30-year loan with a loan balance of $65,000 with an interest rate of 10% and a factor of 8.78. What will be the borrowers monthly P & I payment?

Answer 11

$570.70

Question 12

The cost of points is not deducted from the loan. Points are treated as a

Answer 12

separate debit or charge on a settlement statement, charged to the party who has agreed to pay them.

Question 13

The loan amount is $70,000, and the monthly principal and interest payment will be $479.00 a month for 30 years. How much interest will be paid over the term of the loan?

Answer 13

$102,440.00