Champions School of Real Estate - Real Estate Finance exam Accurately Answered 2024/2025

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