Champions Real Estate Finance Final Exam With Correct Answers 2024

Champions Real Estate Finance Final Exam With Correct Answers 2024 Loan-to-Value Ratio (LTV) -CORRECT ANSWER-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 -CORRECT ANSWER-Includes both real and personal property ( fixtures and furnishings) Blanket Mortgage -CORRECT ANSWER-Covers more than one piece of property. Wraparound Mortgage -CORRECT ANSWER-Method of financing which preserves the low, existing interest rate on the original note. Open-End Mortgage -CORRECT ANSWER-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 -CORRECT ANSWER-The monthly house payment includes principal, interest, taxes and insurance (known as PITI) Collateral -Dependent Loans -CORRECT ANSWER-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 -CORRECT ANSWER-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 -CORRECT ANSWER-Is a measure of the borrower's ability to repay the debt, and is demonstrated through current earnings and job stability. Capital -CORRECT ANSWER-Is the sum of all assets that the borrower has accumulated. Collateral -CORRECT ANSWER-Is something of value that can be pledged as security for repayment. Yield -CORRECT ANSWER-Is the return that the investor recieves over the life of the loan. (Also known as profit) Originator -CORRECT ANSWER-The process of creating a new mortgage loan, including all steps taken by a lender to attract and qualify a borrower. Mortgage Broker -CORRECT ANSWER-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 -CORRECT ANSWER-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 -CORRECT ANSWER-Usually smaller in scale than mortgage bankers or brokers, these lenders typically extend loans with their own funds, at their own risk. Processing -CORRECT ANSWER-Once application is complete the file moves into this phase. Underwriting -CORRECT ANSWER-The detailed process of evaluating a borrower's loan application to determine the risk involved for the lender. Closing -CORRECT ANSWER-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 -CORRECT ANSWER-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 -CORRECT ANSWER-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 -CORRECT ANSWER-The process of transferring funds to a title or escrow company for disbursement The Safe Act -CORRECT ANSWER-Designed to enhance consumer protection and reduce fraud. (Key component of HERA) M1 -CORRECT ANSWER-Is defined as the sum of currency held by the public and transaction deposits at depository institutions. M2 -CORRECT ANSWER-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 -CORRECT ANSWER-Is currency that is not backed by any precious metals at all. Monetary Policy -CORRECT ANSWER-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 -CORRECT ANSWER-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) -CORRECT ANSWER-is the central bank of the United States Monetary inflation -CORRECT ANSWER-When there is an excess of money supply in the market. Demand-pull inflation -CORRECT ANSWER-When there is more money in the market and less goods for sale. Cost-push inflation -CORRECT ANSWER-Occurs when the cost of production and offering services increase, thereby causing manufacturers and tradespeople/vendors to rais their prices accordingly. Discount rate -CORRECT ANSWER-The interest rate charged member banks that borrow from the Federal Reserve System