HUD Counseling Exam - Module 2.2 Housing Options Exam Test Questions And Answers Verified 100% Correct

HUD Counseling Exam - Module 2.2 Housing Options Exam Test Questions And Answers Verified 100% Correct what insurance usually gets confused with MI? - ANSWER life insurance and homeowner's insurance what is another term for a second mortgage? - ANSWER a piggy-back loan when would MI be required by the lender? - ANSWER if the down payment is less than 20% of the sales price or the appraised value of the home what does PMI stand for? - ANSWER private mortgage insurance when might PMI be required? - ANSWER when borrowers of a conventional loan have a down payment of less than 20% of the loan amount where does PMI come from? - ANSWER private or non-government sources what factors influence the rate of PMI? - ANSWER 1. size of the loan 2. LTV 3. borrower's credit score what does LTV ratio stand for? - ANSWER loan-to-value ratio what is an LTV ratio? - ANSWER a percentage calculated by dividing the amount of the outstanding loan amount by the sales price or appraised value of the home what are typical rates for PMI? - ANSWER .5%-1.5% when must the lender automatically terminate PMI? - ANSWER either when the LTV reaches 78% or at the midpoint of the loan when can the borrower request PMI cancellation? - ANSWER once the principa l balance falls to 80% of the original loan value, as long as certain requirements are met what does UFMIP stand for? - ANSWER upfront mortgage insurance premium what does MIP stand for? - ANSWER mortgage insurance premium explain government-insured mortgages - ANSWER borrowers pay an UFMIP and/or an MIP, which goes to the agency that oversees the loan; borrowers can choose to pay the upfront fee in cash or finance is into the loan amount; annual premium is based on unpaid principal balance effective for FHA loans originating on or after _____, _____ can no longer be removed - it remains for the life of the loan - ANSWER June 3, 2013; mortgage insurance what are the three government-insured mortgages? - ANSWER 1. FHA 2. VA 3. USDA what is the upfront charge for FHA mortgage insurance? - ANSWER 1.75% UFMIP what is the annual charge of FHA mortgage insurance? - ANSWER 0.8%-1.05% MIP what are the factors of FHA mortgage insurance? - ANSWER loan origination amount and LTV (for 30-year mortgages) what is the upfront charge for VA mortgage insurance? - ANSWER 1.4%-3.6% funding fee what is the annual charge for VA mortgage insurance? - ANSWER there is none what are factors of for VA mortgage insurance? - ANSWER type of loan, military category, down payment amount, and whether first time or subsequent loan user what is the upfront charge for USDA mortgage insurance? - ANSWER 1% guarantee fee what is the annual charge for USDA mortgage insurance? - ANSWER .35% annual fee what are the factors for USDA mortgage insurance? - ANSWER there are none what are the terms for a conventional fixed rate mortgage? - ANSWER 15, 20, and 30 years explain a conventional fixed rate mortgage - ANSWER interest rate and monthly payments are fixed for the life of the loan what are the requirements for a conventional fixed rate mortgage? - ANSWER 95% max LTV; PMI if LTV is higher than 80% what down payment is necessary for a conventional fixed rate mortgage? - ANSWER at least 5%; can be borrower funds, a gift, or a combination what credit score is needed for a conventional fixed rate mortgage? - ANSWER 700+ who is the target borrower for a conventional fixed rate mortgage? - ANSWER someone who has good credit and funds for down payment what are the terms of a neighborhood conventional fixed rate mortgage? - ANSWER 10, 15, 20, and 30 years explain a neighborhood conventional fixed rate mortgage - ANSWER interest rate and monthly payments are fixed for the life of the loan; borrower must purchase home in designated zip codes what are the requirements for a neighborhood conventional fixed rate mortgage? - ANSWER 97% max LTV; PMI if LTV is higher than 80% what down payment is necessary for a neighborhood conventional fixed rate mortgage? - ANSWER at least 3%; can be borrower funds, a gift, or combination what credit score is necessary for a neighborhood conventional fixed rate mortgage? - ANSWER 660+ who is the target borrower for a neighborhood conventional fixed rate mortgage? - ANSWER someone who has good credit, smaller down payment, and wants to live in revitalized neighborhood what are the terms of a 5/1 adjustable rate mortgage? - ANSWER 30 years explain a 5/1 adjustable rate mortgage - ANSWER interest rate set for first five years, then adjusts annually for life of loan what are the requirements for a 5/1 adjustable rate mortgage? - ANSWER 80% max LTV what is the necessary down payment for a 5/1 adjustable rate mortgage? - ANSWER