Shared Flashcard Set

Details

FIRE 316
Final Exam
30
Real Estate & Planning
Undergraduate 3
12/08/2011

Additional Real Estate & Planning Flashcards

 


 

Cards

Term
What does FHA stand for?
Definition
Federal Housing Administration
Term
How much money do you have to put down in order to take out a FHA loan?
Definition
None
Term
What two things does FHA loans subsidize?
Definition
Home ownership, and default insurance
Term
What is the owner occupant requirement for FHA loans?
Definition
Borrower must move in within 60 days of signing for the mortgage and continue living there for at least one year
Term
At an affordable interest rate, What is the maximum loan value a borrower can receive?
Definition
97%
Term
What is the maximum number of FHA loans one can receive?
Definition
Infinity
Term
What happens if the purchase price exceeds the appraisal of the house in a FHA loan?
Definition
The whole contract can be voided or the seller must reduce the price to the appraisal price
Term
Who originates FHA loans?
Definition
Commercial Banks
Term
What is required of the home-owner under the FHA guidelines that protects the buyer?
Definition
Inspections! Home-owner must pay for repairs before selling the home.
Term
Why was the Va loan originated?
Definition
It was more like a payback plan for the veterans after WW2 for their service to the country
Term
What does the Va loan guarantee?
Definition
the payment of a mortgage loan made by a private lender to a qualified veteran should the borrower default
Term
What is the price limit on the VA loan?
Definition
There are no house price limits but maximum guarantee applies. In other words you can't really buy the expensive house unless you are putting money down
Term
What are the assumption rules for the VA loan?
Definition
Same as FHA loan...The loan can be transferred. If you want to sell your home, you can transfer he loan to a new buyer who doesnt have to be a veteran
Term
How many homes can you own under the VA loan?
Definition
No multiple unit property financing, limited to single family homes
Term
What is the loan to value ratio?
Definition
loan amount/property amount
must be equal or less than .8 because you must make a 20% down payment
Term
What information is seen on a credit report?
Definition
Credit activities, balance owed, payments paid on time, how many times you have been late, home foreclosure, bankruptcy
Term
How long does bankruptcy stay on your credit report?
Definition
7 years
Term
What does your credit score represent?
Definition
Prediction of the likelihood of fault (300-850)
Term
How is credit score computed?
Definition
All the factors calculated to get a # between 300 and 850. 850 being the highest. Similar to SAT percentile ranking
Term
What are the 4 components of a Budget Mortgage Payment?
Definition
Principal (for amortizing loans), Interest, Escrow deposits for property tax, hazard insurance payments
Term
What do Hazard Insurance Payments and Property taxes have in common?
Definition
Both paid once a year, payments are required in order for a mortgage loan to be in good standing, usually costly
Term
Because Hazard Insurance loans can be costly for homeowners what do mortgage lenders require?
Definition
Monthly "escrow" payment to "budget" for these large expenses
Term
What is an escrow account?
Definition
a "set aside" or separate account that is dedicated for a certain purpose
Term
What does the prepayment right state?
Definition
Residential mortgage borrowers have the right to pay off mortgage loans early, either partially or fully
Term
What is the purpose of making partial prepayments?
Definition
If made regularly it reduces the term of the loan.
Term
When do full or total prepayments occur?
Definition
1) homeowner sells the house and uses the purchase money proceeds to pay off the loan (required for title to be transferred).
2) Borrower refinances the existing mortgage (proceeds from a new mortgage are used to terminate or pay off the original mortgage)
Term
When would borrowers be induced to refinance (FRM loans) ?
Definition
when the current market or REFI rate is less than the contract rate on the current mortgage
Term
What are the 2 components of a loan pricing cost?
Definition
the contract rate (up-front cost) and points (loan discount points: up front cost)
Term
What is a "point"?
Definition
industry term for a fee of 1% of the loan amount, charged by the lender.
Must be paid when the loan is made.
Points are the main, largest cost of obtaining a mortgage loan
Term
What are the two types of loans?
Definition
The origination fee and loan discount fees
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