Test Bank Champions Real Estate Finance
Exam Question and Answer | Grade A+
Guaranteed | Frequently Tested
• What does the VA Guarantee? -✓✓Protects Lender against Loss
Encourages lenders to offer veterans loans
• What are the qualifications for a VA Loans -✓✓Residual Income
Debt to income Ratio
• Entitlement -✓✓Veterans entitlement to VA home loans benefits based on military
service.
• Origination -✓✓process of creating a new mortgage loan to attract and qualify a buyer.
• Funding -✓✓transferring funds to a title or escrow for disbursement.
• Underwriting -✓✓evaluating a borrowers loan application to determine the risk involved
for the lender.
• Servicing -✓✓Collecting monthly payments, maintaining records of payments and
balances, paying taxes.
• Primary Market -✓✓borrowers and lenders come together to create and negotiate
terms of a mortgage transaction.
• Secondary Market -✓✓exists for the purchase and sale of existing mortgages to
investors.
• Front End Ratios -✓✓Ratio of proposed loan payments to GMI
• Front End Ratio Calculation -✓✓28% x GMI= Maximum monthly house payment
• Back End Ratios -✓✓Ratio of total recurring monthly debts to GMI
• Back end Ratio Calculation -✓✓36% x GMI= Max PITI and debts per month
• NMLSR- Nationwide Mortgage Licensing System and Registry -✓✓All RMLO must be
registered with this system
• Who are the FHA Loan Program Admistrators -✓✓US Dept of Housing and Urban
Development (HUD)
, • What does the FHA mortgage insurance cover? -✓✓single family, multi family and
manufactured homes
• What is the Fair Housing Act of 1968? -✓✓prohibits discrimination based on race,
color, national origin, sex, religions, families with children and disabilities.
• What is included in the PITI? -✓✓P and I, monthly taxes, monthly insurance
• What are the advantages of an FHA Loan -✓✓1. Qualifying ratios are more lenient
2. LTV's are very high (lower down payment)
• Who can pay the points on an FHA loan? -✓✓Buyer or Seller
• TVLB allows veterans to borrow? -✓✓Up to $150,000 to purchase land and requires a
minimum 5% down to purchase 1 acre or more.
• What is an Adjustable Rate Mortgage (ARM) -✓✓A loan whose rate is adjusted,
usually annually, based on the behavior of the economic index with which it is
associated (e.g., the Consumer Price Index)
• LTV (Loan to Value) -✓✓percentage of the lesser of the appraised value or sales price
that the lender will lend
• LTV Calculation -✓✓Sales Price-80%= 20% Down Payment
• Amortization -✓✓the reduction of a loan balance through payments made over a
period of time
• What is required for all FHA transactions? -✓✓Escrow
• Encumbrance -✓✓claim, lien, charge or liability attached to and binding a real
property.
• What is the required down payment of an FHA loan -✓✓Usually 3.5%
• What are the requirements for VLB financing? -✓✓!. land must be in TX
2. contain 1 acre or more
3. Have access to a public road.
4. Survey must have a field note description of the tract
5. Can't be zoned for commercial use
6. Can't be owned by another veteran or spouse within the previous 3 years.
Exam Question and Answer | Grade A+
Guaranteed | Frequently Tested
• What does the VA Guarantee? -✓✓Protects Lender against Loss
Encourages lenders to offer veterans loans
• What are the qualifications for a VA Loans -✓✓Residual Income
Debt to income Ratio
• Entitlement -✓✓Veterans entitlement to VA home loans benefits based on military
service.
• Origination -✓✓process of creating a new mortgage loan to attract and qualify a buyer.
• Funding -✓✓transferring funds to a title or escrow for disbursement.
• Underwriting -✓✓evaluating a borrowers loan application to determine the risk involved
for the lender.
• Servicing -✓✓Collecting monthly payments, maintaining records of payments and
balances, paying taxes.
• Primary Market -✓✓borrowers and lenders come together to create and negotiate
terms of a mortgage transaction.
• Secondary Market -✓✓exists for the purchase and sale of existing mortgages to
investors.
• Front End Ratios -✓✓Ratio of proposed loan payments to GMI
• Front End Ratio Calculation -✓✓28% x GMI= Maximum monthly house payment
• Back End Ratios -✓✓Ratio of total recurring monthly debts to GMI
• Back end Ratio Calculation -✓✓36% x GMI= Max PITI and debts per month
• NMLSR- Nationwide Mortgage Licensing System and Registry -✓✓All RMLO must be
registered with this system
• Who are the FHA Loan Program Admistrators -✓✓US Dept of Housing and Urban
Development (HUD)
, • What does the FHA mortgage insurance cover? -✓✓single family, multi family and
manufactured homes
• What is the Fair Housing Act of 1968? -✓✓prohibits discrimination based on race,
color, national origin, sex, religions, families with children and disabilities.
• What is included in the PITI? -✓✓P and I, monthly taxes, monthly insurance
• What are the advantages of an FHA Loan -✓✓1. Qualifying ratios are more lenient
2. LTV's are very high (lower down payment)
• Who can pay the points on an FHA loan? -✓✓Buyer or Seller
• TVLB allows veterans to borrow? -✓✓Up to $150,000 to purchase land and requires a
minimum 5% down to purchase 1 acre or more.
• What is an Adjustable Rate Mortgage (ARM) -✓✓A loan whose rate is adjusted,
usually annually, based on the behavior of the economic index with which it is
associated (e.g., the Consumer Price Index)
• LTV (Loan to Value) -✓✓percentage of the lesser of the appraised value or sales price
that the lender will lend
• LTV Calculation -✓✓Sales Price-80%= 20% Down Payment
• Amortization -✓✓the reduction of a loan balance through payments made over a
period of time
• What is required for all FHA transactions? -✓✓Escrow
• Encumbrance -✓✓claim, lien, charge or liability attached to and binding a real
property.
• What is the required down payment of an FHA loan -✓✓Usually 3.5%
• What are the requirements for VLB financing? -✓✓!. land must be in TX
2. contain 1 acre or more
3. Have access to a public road.
4. Survey must have a field note description of the tract
5. Can't be zoned for commercial use
6. Can't be owned by another veteran or spouse within the previous 3 years.
