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Terms in this set (77)
A buyer offers $150,000 for a home. The property is appraised at $145,000. If he gets a conforming loan, he will need private mortgage insurance if the loan exceeds ________.
$116,000
If a mortgagor pays $794.62 monthly to the mortgagee to be applied first to 7% interest and the balance to the principal, about how much is applied to principal when the unpaid principal balance is $83,695.47?
$306
The principal balance on Doug Fish's home is currently $180,000. He has a 30-year loan at 9%. His next monthly payment of $1,500 will reduce his principal balance by _________.
$150
A borrower obtains a $150,000 30-year loan with a fixed rate of 6.5%. If he gets a 2/1 buydown, in order to calculate the cost of the buydown, he will have to calculate
monthly payments for a loan at 4.5%, 5.5% and 6.5%
If a borrower had an outstanding loan balance as of April 1 of $549,287, with monthly loan payments of $4,020 at an interest rate of 5.75%, what would the outstanding loan balance be as of May 1 if he made his payment on time?
$547,899
An applicant is interested in a 30-year home mortgage with 2 points at a fixed interest rate of 6%. The price of the house is $300,000 and the down payment will be 20%. What is the loan amount?
$240,000
A borrower applied for a first loan of $240,000 and a piggyback second of $30,000 to purchase a $300,000 home. What is his LTV?
80%
What is the front-end ratio given the following variables? Gross monthly income: $5,300; monthly principal and interest: $1,020; annual property taxes: $3,278; annual homeowners insurance: $ 650; and monthly auto payment: $ 295.
25%
A borrower has a gross monthly income of $10,000. His monthly debt payments are $1,000. If his monthly debt ratio is 30%, his total housing expense is _________.
$2000
If Applicant A earns $1,600 biweekly and Applicant B earns $1,700 semimonthly, then who earns more per month and how much more?
Applicant A earns $70 more per month
The appraised value of a house is $200,000, the sales price of the house is $210,000, and the borrower has a $25,000 down payment. What is the LTV?
92.5%
A buyer wants to make an offer of $190,000 on a property. He has $6,000 available in earnest money. His lender will issue a 95% loan. The property is appraised at $192,000. What is the loan amount going to be?
$180,500
For a $380,000 property, an applicant is offered a loan at 95% of the first $250,000 of value and 90% of the value above $250,000.
95%=$237,500
90%=$117,000
Loan=$354,500
If a sales price is $300,000, the down payment is $25,000 and a second mortgage is $35,000. What is the CLTV?
91.7%
A person has a house worth $100,000 and an existing $70,000 loan balance. He has a HELOC of $20,000, of which he has drawn $10,000.
What is his LTV, CLTV, TLTV?
LTV=70%
CLTV=80%
TLTV=90%
Borrower Gemma Gentry paid $200,000 for her home, and got a 90% loan. If Gemma pays for two discount points, the loan fees that Erica charges her will total
$3600
Lowell Lannigan takes out a $180,000 loan at an interest rate of 5%. What will his daily interest be for a 360-day year?
$25
John Johnson obtained a 90% loan amounting to $63,000 to buy his house. If he had to pay 2 points for loan fees and 4 discount points for his loan, what sum does he need for his portion of the settlement costs?
$10,780
An applicant has a lock-in agreement providing for an interest rate of 5.5% per annum for 15 years. If interest rates offered by the lender increase by 0.5% during the lock-in period, the interest rate for the applicant's loan will be
%5.5
What is the front-end ratio given the following variables? Gross monthly income: $5,300; monthly principal and interest: $1,020; annual property taxes: $3,278; annual homeowners insurance: $ 650; and monthly auto payment: $ 295.
25%
A higher-priced loan
may not have a term of less than 12 months.
A borrower paid $300,000 for a home. He got an 80% loan, paying 1 point for a loan origination fee and 2 discount points. How much was paid in points?
$7,200
A $100,000 loan with a 5.5% interest rate closes on August 17. This means the buyer will pay for interest that is charged starting on August 17. The loan payment schedule will "start" on September 1, with the first payment (covering the interest for September) due October 1. How much would be owed for a 365 day year and a 360 day year?
365 day=$226.05
360 day=$213.92
The settlement date is May 31, the due date of the borrower's first mortgage loan payment is July 1, and annual taxes are $2,160. How much are owed in taxes for the loan payment?
$180
If annual taxes are $2,160 and the due date for taxes is November 15 for the tax year. The reserve amount represents the amount of taxes accruing between November 15 of last year and June 30.
$1,440
A buyer obtains a $160,000 loan to purchase a property with a sales price of $200,000. The insurer determines the insurable value of the improvements is $150,000. How much in hazard insurance needs to be purchased?
$150,000
A $100,000 loan at 6% interest has a 2% penalty for prepayment within two years. If, at the time of prepayment, the loan balance were $98,750, what would the penalty be?
$1975
A $100,000 loan at 6.5% interest has a penalty equal to six months' interest if the loan were repaid within three years. If, at the time of prepayment, the loan balance were $98,750, what would the penalty be?
$3456.25
An ARM had an initial rate of 6%. It has a 2% annual cap and a margin of 2.5%. If its index rate, the Treasury bill rate, has increased 3 percentage points to 6.5%, what is the new ARM indexed rate?
8%
An ARM had an initial rate of 3-5/8%. It has a 2/6 cap and a margin of 2.50%. If its index rate is the current Treasury bill rate of 3-3/8%, what would the new ARM rate be when it is adjusted?
5 5/8%
If the initial interest rate for an ARM is 5%, the index rate is 4%, and the margin is 2%, which of the following is true?
6%
If a mortgagor pays $794.62 monthly to the mortgagee to be applied first to 7% interest and the balance to the principal, how much is applied to principal when the unpaid principal balance is $83,695.47?
$306.40
A borrower applies for a $200,000 refinance loan. He uses the services of a mortgage broker who charges a 1% origination fee and a $600 processing fee. The broker intends to broker the loan to a wholesale lender who charges a $1,000 administration fee. What dollar amount must be shown on the Loan Estimate on page 2, Section A "Origination Charges"?
The combined amounts of the broker fees ($2,600) and the wholesale lender administration fee ($1,000) for a total fee of $3,600.
A borrower applies for a $200,000 refinance loan. He uses the services of a mortgage broker who charges a 1% origination fee and a $600 processing fee. The broker intends to broker the loan to a wholesale lender who charges a $1,000 administration fee. If the mortgage broker is unsuccessful at obtaining approval with the first lender and submits the loan file to a second lender whose administration fee is $1,200, what can the broker do about the fee increase?
The mortgage broker may not increase the origination charge fee once it has been disclosed to the borrower and accepted. The increase of this fee does not qualify as an acceptable changed circumstance.
A borrower applies for a $200,000 refinance loan. He uses the services of a mortgage broker who charges a 1% origination fee and a $600 processing fee. The broker intends to broker the loan to a wholesale lender who charges a $1,000 administration fee. If the dollar amounts shown on the Closing Disclosure for items listed in Section B of the "Loan Costs" page 2 total $4,625, what is the maximum amount for these charges that can be shown on the Closing Disclosure on page 2, Section B?
The closing costs shown in Section B of the Closing Disclosure have zero tolerance for change, therefore the maximum amount for these charges to the borrower is $4,625.
A borrower applies for a $200,000 refinance loan. He uses the services of a mortgage broker who charges a 1% origination fee and a $600 processing fee. The broker intends to broker the loan to a wholesale lender who charges a $1,000 administration fee. If the actual fees charged on the Closing Disclosure for items listed in Section B of the "Loan Costs" page 2 total $6,000, what must the mortgage broker do?
The mortgage broker must pay a tolerance cure of $1,375 at closing or within 60 days of consummation because no increase is allowed on Section B fees at consummation.
Two borrowers each apply for a mortgage loan of $125,000. Their closing costs are $3,500 for each loan and the interest rate charged is 4.25%. The first borrower receives a 30-year fixed rate mortgage and the second borrower secures a 15-year fixed rate mortgage. Which borrower is quoted the highest Annual Percentage Rate?
The APR tells a borrower the total cost of financing a loan in percentage terms, as a relationship of the total finance charges to the total amount financed. Therefore, if the term is less, the interest paid and the finance charges will be spread over a shorter period of time, increasing the APR.
Two borrowers each apply for a mortgage loan of $125,000. Their closing costs are $3,500 for each loan and the interest rate charged is 4.25%. The first borrower receives a 30-year fixed rate mortgage and the second borrower secures a 15-year fixed rate mortgage. Which borrower will pay the higher finance charges imposed on the loan?
The total finance charge includes the repayment of interest over the term of the loan. A 30-year mortgage will have increased interest costs due to a longer repayment term.
Two borrowers each apply for a mortgage loan of $125,000. Their closing costs are $3,500 for each loan and the interest rate charged is 4.25%. The first borrower receives a 30-year fixed rate mortgage and the second borrower secures a 15-year fixed rate mortgage. Which borrower will pay more principal repayment?
Regardless of the term of the loan or interest repaid, the principal to be repaid is the same amount ($125,000) for each loan. Only the interest charge will vary.
A borrower is seeking a FHA insured loan. He will put the minimum 3.5% down payment and pay the Up Front Mortgage Insurance fee of 1.75%. He will pay the annual mortgage insurance fee of .85% for the life of the loan. His interest rate is 5%, the APOR (as of the date the loan interest rate is locked) is 4.672%, and his APR for this loan is 6.474%. Is this a higher priced loan?
Current APOR 4.672
+ 1.500
=6.172% (APOR Threshold)
The APR is greater than the APOR threshold; therefore it IS a higher priced loan.
A borrower is seeking a FHA insured loan. He will put the minimum 3.5% down
payment and pay the Up Front Mortgage Insurance fee of 1.75%. He will pay the annual mortgage insurance fee of .85% for the life of the loan. His interest rate is 5%, the APOR (as of the date the loan interest rate is locked) is 4.672%, and his APR for this loan is 6.474%. If this loan is a higher priced loan, what must be done?
If the loan meets the standards of a higher priced loan, the creditor must verify the borrower's ability to repay the loan and an escrow/impound account must be established for a minimum of five years, according to HOEPA. The loan must meet the other terms of the regulation, such as no balloon payments, etc.
A borrower is seeking a FHA insured loan. He will put the minimum 3.5% down
payment and pay the Up Front Mortgage Insurance fee of 1.75%. He will pay the annual mortgage insurance fee of .85% for the life of the loan. His interest rate is 5%, the APOR (as of the date the loan interest rate is locked) is 4.672%, and his APR for this loan is 6.474%. Is this a high cost loan?
A high cost loan is one where the APR exceeds the sum of the APOR + 6.5%. In this scenario, the APR is less than 11.172% (4.672% + 6.5%).
A borrower is seeking a FHA insured loan. He will put the minimum 3.5% down payment and pay the Up Front Mortgage Insurance fee of 1.75%. He will pay the annual mortgage insurance fee of .85% for the life of the loan. His interest rate is 5%, the APOR (as of the date the loan interest rate is locked) is 4.672%, and his APR for this loan is 6.474%. If the finance charge includes two points origination, two discount points, and 1.5 percent of the loan amount as closing costs, using the above information, is this a high cost loan if it was refinance transaction?
The loan would be a high cost loan in this scenario because the finance charges exceed the 5% guideline:
Closing costs required: 1.5%
Discount points charged: 2.0%
Origination fee charged: 2.0%
Total finance charges 5.50%
Regardless of the loan amount, the finance charges exceed the high cost finance charge guideline of 5%. Therefore, the loan is a high cost loan.
Mary wants an FHA loan to buy a house. She would have these monthly expenses:
$536.82 Principal& Interest ($100,000 at 5% for 360 months)
$ 53.00 Property Taxes
$ 25.00 Homeowners Insurance
$ 95.83 MIP (FHA MIP based on 96% LTV)
+$ 90.00 Homeowners Association Dues
$800.65 Total Housing Expense (PITI)
What should Mary's required stable monthly gross income be in order to qualify for this
loan?
Dividing the total housing expense by 31%, this loan requires a stable monthly income of $2,582.74 ($800.65 ÷ .31 = $2,582.74).
Mary wants an FHA loan to buy a house. She would have these monthly expenses:
$800.65 Housing Expense
$ 192.65 Auto Payment
+$ 40.00 Revolving Credit Account
$1,033.30 Total Debt
Based on her debt, what should Mary's required stable monthly gross income be in order to qualify for this loan using the total debt-to-income ratio?
FHA allows a maximum total debt-to-income ratio of 43%, so $1,033.30 ÷ 0.43 = $2,403.02, the minimum monthly income needed. Remember, though, a borrower must qualify under both ratios, so $2,403.02 is actually the minimum monthly income Mary would need in order to buy this home.
Veteran Dave wants to buy a house for $480,000. He has his full entitlement of $104,250 available.What is the cash down payment Dave must make to buy this house?
$480,000 x .25=$120,000 (Guaranty Required)
$120,000 -$104,250 =$15,750 (Down Payment needed)
An eligible borrower applies for an FHA loan on a house with an appraised value of $100,000 and a purchase price of $96,000. What is the required minimum investment?
$3,360
A borrower wants to buy a $150,000 home and is going to make a $15,000 down payment. The borrower is seeking a conventional loan, but doesn't want to pay more than 6 1/2% interest. The lender agrees to 6 1/2% interest if the loan has three discount points and the loan origination fee is 2%.What is the total amount of points (in dollars and percentage) that the lender will receive for making this loan?
$135,000 loan amount
total of 5 points, or 5% of the loan. (Discount points) ($135,000 x .03)=$4,050 (discount points)
($135,000 x .02)= $2,700 (loan origination fee)
($4,050 + $2,700)=$6,750 (total lender receives in points)
A borrower wants to buy a $150,000 home and is going to make a $15,000 down payment. The borrower is seeking a conventional loan, but doesn't want to pay more than 6 1/2% interest. The lender agrees to 6 1/2% interest if the loan has three discount points and the loan origination fee is 2%. If the seller agrees to pay the discount points, how much will the seller net from the transaction?
($150,000 - $4,050)=$145,950
A borrower wants to buy a $150,000 home and is going to make a $15,000 down payment. The borrower is seeking a conventional loan, but doesn't want to pay more than 6 1/2% interest. The lender agrees to 6 1/2% interest if the loan has three discount points and the loan origination fee is 2%.
What will the borrower's note state as the interest rate on the loan? What dollar amount will the note say was borrowed?
6.500% = loan note rate (no temporary buy down)
$150,000 - $15,000=$135,000 (loan amount=note amount)
Assume a borrower gets a 1-year ARM loan for $100,000 for 30 years. It has a 5/2/6 interest rate cap. The current index rate is 4.5%; the margin is 3%; and the discounted start rate is 4%. What is the rate for the first year?
4%
Assume a borrower gets a 1-year ARM loan for $100,000 for 30 years. It has a 5/2/6 interest rate cap. The current index rate is 4.5%; the margin is 3%; and the discounted start rate is 4%. What is the rate for year 2 if the current index rate is 6.5%
9%
Assume a borrower gets a 1-year ARM loan for $100,000 for 30 years. It has a 5/2/6 interest rate cap. The current index rate is 4.5%; the margin is 3%; and the rate for year 2 is 9%. What is the rate for year 3 if the current index rate is 4%
7%
Assume a borrower gets a 1-year ARM loan for $100,000 for 30 years. It has a 5/2/6 interest rate cap. The current index rate is 4.5%; the margin is 3%; and the rate for year 3 is 7%. What is the rate for year 4 if the current index rate is 7%
9%
Assume a borrower gets a 1-year ARM loan for $100,000 for 30 years. It has a 5/2/6 interest rate cap. The current index rate is 4.5%; the margin is 3%; and the rate for year 4 is 9%. What is the rate for year 5 if the current index rate is 8%
10%
A borrower received a 30-year ARM mortgage loan for $200,000. Rate caps are 3/2/6 (initial adjustment cap/periodic interest rate cap/lifetime interest rate
cap). The start rate is 3.50% and the loan adjusts every 12 months for the life of the mortgage. The index used for this mortgage is LIBOR, which, for this exercise is 3.00% at the start of the loan, 4.45% at the end of the first year, and 4.50% at the end of the second year. The margin on the loan is 3.00%, which remains the same for the duration of the loan. What is the interest rate the borrower will pay after the first rate adjustment?
6.50%
A borrower received a 30-year ARM mortgage loan for $200,000. Rate caps are 3/2/6 (initial adjustment cap/periodic interest rate cap/lifetime interest rate
cap). The start rate is 3.50% and the loan adjusts every 12 months for the life of the mortgage. The index used for this mortgage is LIBOR, which, for this exercise is 3.00% at the start of the loan, 4.45% at the end of the first year, and 4.50% at the end of the second year. The margin on the loan is 3.00%, which remains the same for the duration of the loan. What is the fully indexed rate after the second year?
7.50%
A borrower received a 30-year ARM mortgage loan for $200,000. Rate caps are 3/2/6 (initial adjustment cap/periodic interest rate cap/lifetime interest rate
cap). The start rate is 3.50% and the loan adjusts every 12 months for the life of the mortgage. The index used for this mortgage is LIBOR, which, for this exercise is 3.00% at the start of the loan, 4.45% at the end of the first year, and 4.50% at the end of the second year. The margin on the loan is 3.00%, which remains the same for the duration of the loan. What is the maximum interest rate the borrower will pay during the 30 year term for this loan?
9.50%
A borrower received a 30-year ARM mortgage loan for $200,000. Rate caps are 3/2/6 (initial adjustment cap/periodic interest rate cap/lifetime interest rate
cap). The start rate is 3.50% and the loan adjusts every 12 months for the life of the mortgage. The index used for this mortgage is LIBOR, which, for this exercise is 3.00% at the start of the loan, 4.45% at the end of the first year, and 4.50% at the end of the second year. The margin on the loan is 3.00%, which remains the same for the duration of the loan. If the interest rate is at its maximum, what would the LIBOR index have to be to reach the maximum interest rate?
6.50%
A borrower earns $15.75 per hour and works 40 hours per week. He wants to be prequalified for FHA home financing with a PITI payment of no more than his current rental payment of $1,000 per month. He has a truck payment of $250 per month and a credit card payment of $25 per month. He intends to obtain a loan from his 401K account for the 3.5% down payment. What is the maximum payment amount for which the borrower can qualify?
$2,730x .31=$846.30
$2,730.00 x .43 =$1,173.90- ($250+$25)=$898.90
$846.30 is the lower of possibilities
Bob is buying a house. It was appraised at $236,000, the sales price is $228,000, and the loan amount is $216,800. In order to buydown his interest rate, Bob is willing to pay 2 points in addition to the 1 point in loan origination fees. What is the price of Bob's discount points?
$216,800 x .02=$4,336
A borrower has a stable monthly gross income of $3,200 and recurring monthly debts of $370. What is the maximum amount of money available to him for monthly housing expenses in order to qualify for a conforming loan?
$3,200 x .28=$896
$3,200 x .36 = $1,152- $370 = $782
$782.00 is the lower of possibilities
If $90,000 is the loan amount on a $100,000 home with a Fannie Mae/Freddie Mac coverage rate of 0.62%, what is the monthly PMI cost?
$46.50
A borrower offers to purchase a home for a $120,000: His first mortgage amount is $90,000, the seller is providing a second mortgage of 15% of the sale price, and the borrower provides the balance as a cash down payment. What is the LTV? What is the CLTV?
75% / 90%
A potential borrower is applying for a conventional loan to purchase a primary residence. Currently, he pays $500 in rent, $420 for an auto loan, $170 toward his VISA bill, and $300 on a student loan each month. His gross monthly income totals $4,900 and his take-home pay after taxes is $3,700. What is the maximum housing payment for which he can qualify?
$874
Borrower Stu wants to get an FHA loan for a home priced at $253,500 and appraised for $257,000. The monthly PITI payment on this house would be $1,780. He has a 680 credit score, gross monthly income of $6,850, other monthly recurring debts of $850, and a $75 monthly electric bill. Stu will finance the 1.75% UFMIP into the loan amount. What is Stu's minimum down payment for the home purchase?
$8,872.50
Bill wants to buy a house that is selling for $160,000, and the lender has approved him for an 80% conventional loan. How much can Bill borrow?
$128,000 for an 80% conventional loan.
Bill wants to buy a house that is selling for $160,000, and the lender has approved him for an 80% conventional loan. What would be the required down payment?
20% down payment of $32,000.
Bill wants to buy a house that is selling for $160,000, and the lender has approved him for an 80% conventional loan. If the house appraises for $150,000, how much can Bill borrow?
$120,000 (80%) if the house is appraised at $150,000.
Bill wants to buy a house that is selling for $160,000, and the lender has approved him for an 80% conventional loan. What other options does he have?
Bill could offer the seller the appraised value of $150,000 or he needs to come up with an additional $8,000 as part of his down payment.
If the sale price of a home is $100,000, on a 90% LTV 30-year fixed mortgage, calculate the PMI using the sample rate card. Use the Fannie Mae/Freddie Mac required 25% coverage, at a rate of 0.62%. What is the loan amount?
$90,000 (90% LTV)
If the sale price of a home is $100,000, on a 90% LTV 30-year fixed mortgage, calculate the PMI using the sample rate card. Use the Fannie Mae/Freddie Mac required 25% coverage, at a rate of 0.62%. What is the fee due at closing?
$558 (0.0062 rate card factor x $90,000)
If the sale price of a home is $100,000, on a 90% LTV 30-year fixed mortgage, calculate the PMI using the sample rate card. Use the Fannie Mae/Freddie Mac required 25% coverage, at a rate of 0.62%. How much will be added to the borrower's monthly mortgage payment?
$46.50 ($558.00 ÷ 12 = $46.50)
Review the secondary financing for a $120,000 home:
$90,000= 75% First Mortgage (primary lender)
$18,000 = 15% Second Mortgage (from seller)
+$12,000= 10% Down Payment (from borrower)
$120,000= 100% Total Sales Price
What is the loan-to-value (LTV)?
75%. LTV is the first mortgage loan amount divided by the lesser of the sale price or appraisal.
Review the secondary financing for a $120,000 home:
$90,000= 75% First Mortgage (primary lender)
$18,000 = 15% Second Mortgage (from seller)
+$12,000= 10% Down Payment (from borrower)
$120,000= 100% Total Sales Price
What is the combined loan-to-value (CLTV)?
90%. CLTV is the sum of all mortgage amounts divided by the lesser of the sale price or appraisal.
You are pre-qualifying a buyer for a conventional loan on a house with the purchase price of $160,000. She states she does not want to pay PMI on the loan. In that case, what is the maximum loan amount she can receive (assuming no lender-paid PMI)?
$128,000
A buyer is paying $200,000 for a house. He makes a $30,000 down payment, gets a first mortgage for $160,000, and a second mortgage to cover the balance. What is his CLTV?
85%
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