Champions Real Estate Finance
Questions
and Answers 100% Correct
Loan-to-Value Ratio (LTV)✔✔The percentage of the lesser of the appraised value or sales price
that the lender will lend.
ex: If a borrower is approved for an 80% loan, it means that the lender will loan up to 80% of the
sales price or appraised value, whichever is lower.
Package Mortgage✔✔Includes both real and personal property ( fixtures and furnishings)
Blanket Mortgage✔✔Covers more than one piece of property.
Wraparound Mortgage✔✔Method of financing which preserves the low, existing interest rate on
the original note.
Open-End Mortgage✔✔Permits additional borrowing on the same note. This is sometimes called
a credit card mortgage or a home equity line of credit - HELOC.
Budget Mortgage✔✔The monthly house payment includes principal, interest, taxes and
insurance (known as PITI)
Collateral -Dependent Loans✔✔A hard money loan is a specific type of asset-based financing in
which a borrower receives funds secured by the value of a parcel of real estate.
Character✔✔Is a measure of the willingness of a borrower to make on-time payments. Credit
character is revealed in the borrower's credit report.
,Capacity✔✔Is a measure of the borrower's ability to repay the debt, and is demonstrated through
current earnings and job stability.
Capital✔✔Is the sum of all assets that the borrower has accumulated.
Collateral✔✔Is something of value that can be pledged as security for repayment.
Yield✔✔Is the return that the investor recieves over the life of the loan. (Also known as profit)
Originator✔✔The process of creating a new mortgage loan, including all steps taken by a lender
to attract and qualify a borrower.
Mortgage Broker✔✔Typically functions as a middleman between the borrower and the lender,
negotiating, selling or arranging loans to be delivered to larger investors. At one time originated
up to 80% of all mortgage loans. (Back on the rise)
Mortgage Banker✔✔Entities which provide their own funds for the purpose of providing
mortgage financing, as opposed to commercial banks/savings associations. (Held, or
"Warehoused")
Correspondent Lender✔✔Usually smaller in scale than mortgage bankers or brokers, these
lenders typically extend loans with their own funds, at their own risk.
Processing✔✔Once application is complete the file moves into this phase.
Underwriting✔✔The detailed process of evaluating a borrower's loan application to determine
the risk involved for the lender.
Closing✔✔The consummation of a real estate transaction in which all appropriate documents are
signed and the proceeds of the mortgage loan are then disbursed by the lender.
, Servicing✔✔Includes collecting monthly payments, maintaining records of payments and
balances, collecting and paying taxes and insurance ( and managing escrow and impound funds)
remitting funds to the note holder, and following up on delinquencies.
Supply and Demand✔✔an economic concept that states that the price of a good rises and falls
depending on how many people want it and depending on how much of the good is available.
Funding✔✔The process of transferring funds to a title or escrow company for disbursement
The Safe Act✔✔Designed to enhance consumer protection and reduce fraud. (Key component of
HERA)
M1✔✔Is defined as the sum of currency held by the public and transaction deposits at
depository institutions.
M2✔✔Is defined as M1 plus saving deposits, small-denomination time deposits (those issued in
amounts of less than $100,000) and retail money market mutual funds shares.
Fiat Money✔✔Is currency that is not backed by any precious metals at all.
Monetary Policy✔✔Is the maintenance of a stable money supply that provides for growth in the
economy while keeping inflation in. The federal reserves is responsible for this policy in the
United States.
Fiscal Policy✔✔Federal Government spending. Approved by Congress. At the treasury level,
funds can be raised to pay for government spending by raising taxes and increasing borrowing.
Federal Reserve (The Fed)✔✔is the central bank of the United States
Questions
and Answers 100% Correct
Loan-to-Value Ratio (LTV)✔✔The percentage of the lesser of the appraised value or sales price
that the lender will lend.
ex: If a borrower is approved for an 80% loan, it means that the lender will loan up to 80% of the
sales price or appraised value, whichever is lower.
Package Mortgage✔✔Includes both real and personal property ( fixtures and furnishings)
Blanket Mortgage✔✔Covers more than one piece of property.
Wraparound Mortgage✔✔Method of financing which preserves the low, existing interest rate on
the original note.
Open-End Mortgage✔✔Permits additional borrowing on the same note. This is sometimes called
a credit card mortgage or a home equity line of credit - HELOC.
Budget Mortgage✔✔The monthly house payment includes principal, interest, taxes and
insurance (known as PITI)
Collateral -Dependent Loans✔✔A hard money loan is a specific type of asset-based financing in
which a borrower receives funds secured by the value of a parcel of real estate.
Character✔✔Is a measure of the willingness of a borrower to make on-time payments. Credit
character is revealed in the borrower's credit report.
,Capacity✔✔Is a measure of the borrower's ability to repay the debt, and is demonstrated through
current earnings and job stability.
Capital✔✔Is the sum of all assets that the borrower has accumulated.
Collateral✔✔Is something of value that can be pledged as security for repayment.
Yield✔✔Is the return that the investor recieves over the life of the loan. (Also known as profit)
Originator✔✔The process of creating a new mortgage loan, including all steps taken by a lender
to attract and qualify a borrower.
Mortgage Broker✔✔Typically functions as a middleman between the borrower and the lender,
negotiating, selling or arranging loans to be delivered to larger investors. At one time originated
up to 80% of all mortgage loans. (Back on the rise)
Mortgage Banker✔✔Entities which provide their own funds for the purpose of providing
mortgage financing, as opposed to commercial banks/savings associations. (Held, or
"Warehoused")
Correspondent Lender✔✔Usually smaller in scale than mortgage bankers or brokers, these
lenders typically extend loans with their own funds, at their own risk.
Processing✔✔Once application is complete the file moves into this phase.
Underwriting✔✔The detailed process of evaluating a borrower's loan application to determine
the risk involved for the lender.
Closing✔✔The consummation of a real estate transaction in which all appropriate documents are
signed and the proceeds of the mortgage loan are then disbursed by the lender.
, Servicing✔✔Includes collecting monthly payments, maintaining records of payments and
balances, collecting and paying taxes and insurance ( and managing escrow and impound funds)
remitting funds to the note holder, and following up on delinquencies.
Supply and Demand✔✔an economic concept that states that the price of a good rises and falls
depending on how many people want it and depending on how much of the good is available.
Funding✔✔The process of transferring funds to a title or escrow company for disbursement
The Safe Act✔✔Designed to enhance consumer protection and reduce fraud. (Key component of
HERA)
M1✔✔Is defined as the sum of currency held by the public and transaction deposits at
depository institutions.
M2✔✔Is defined as M1 plus saving deposits, small-denomination time deposits (those issued in
amounts of less than $100,000) and retail money market mutual funds shares.
Fiat Money✔✔Is currency that is not backed by any precious metals at all.
Monetary Policy✔✔Is the maintenance of a stable money supply that provides for growth in the
economy while keeping inflation in. The federal reserves is responsible for this policy in the
United States.
Fiscal Policy✔✔Federal Government spending. Approved by Congress. At the treasury level,
funds can be raised to pay for government spending by raising taxes and increasing borrowing.
Federal Reserve (The Fed)✔✔is the central bank of the United States
