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CRE: Law & Practice 11 Test
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Terms in this set (33)
The Equal Credit Opportunity Act makes it illegal for lenders to refuse credit or discriminate because an applicant is a single woman. True or False
True
Does an FHA borrower have to pledge to never obtain a second loan?
No
VA funding fees vary according to veteran's eligibility. True of False
True
The amount a qualified lending institution may loan to a qualified veteran, on a VA-guaranteed loan, is limited by VA to:
the amount shown on the Certificate of Reasonable Value
The Federal National Mortgage Association (Fannie Mae) is NOT an active participant in the secondary mortgage market. True or False
False
A lender has agreed to loan $55,000 with monthly interest payments of $424. What interest rate has the lender agreed to?
.0925
(I = $424 / month x 12 = $5,088 annual; P = $55,000; R = $5,088 / $55,000 = 0.0925 = 9.25%)
Roberto and Maria Martinez have a new loan in the amount of $80,000. The interest rate is 10%. The monthly payments are $710, principal and interest. What is their loan balance after the they make two month's worth of loan payments?
79913
($80k x 10% = $8,000 / 12 =$666.67; $710 - $666.67 = $43.33; $80,000 - $43.33 = $79,956; $79,956 x 10% = $7,995 / 12 = $666.30; $710 - $666.30 = $43.70; $79,956 - $43.70 = $79,912.8 ^ $79,913.00)
When the amortized payment of a mortgage remains constant over the period of the loan but leaves an outstanding balance to be paid at the end, this payment is called:
a balloon payment
Sue and Joe paid a total of $6,600 in interest payments for the year. They borrowed $66,000. What is their interest rate?
.1
($ 6,600 divided by $66,000 = .10 = 10%)
The type of mortgage that shifts the risk or reward of changing interest rates from the lender to the borrower is called:
an adjustable-rate mortgage
The person who gets a real estate loan by signing a note and mortgage is the:
mortgagor
An amortized loan will be paid off:
In equal monthly payments with the entire loan being paid off at the end of the term of the loan
You are analyzing information given to you concerning a simple interest loan. All that you know is that the first monthly interest payment is $375 and that the annual interest rate is 9.75%. How much money was borrowed?
46,153.85
(12 x $375 = $4500 is the total amount of interest paid in one year which by extension is 9.75% (the annual interest rate) of the original loan amount. Dividing $4500 (total interest paid in a year by .0975 (annual interest rate of 9.75% converted to a fraction) will give you the borrowed amount of $46,153.8462)
Conventional loans refer to loans that have what type of maximum loan to value ratio?
80%
Do conventional loans typically have private mortgage insurance?
No
A mortgage loan payable in equal monthly installments that are sufficient to pay the principal in full during the term of the loan is called a:
amortized loan
The borrower has three business days to rescind a consumer loan that placed a lien on her residence. Which law provides for this right of rescission?
Truth-in-lending act
If Joe's quarterly interest payments are $1,500 on a $120,000 loan, then what is her annual interest rate?
.05
(Divide the income by the investment. So, $150 x 4 (quarters a year) = $600, and $600/$12,000 = 5%)
May a funding fee be financed on a VA loan?
Yes
Jean owes $80,000 at 12% interest on her home. How much interest will she pay in one year?
9600
($80,000 x .12 = $9,600)
Freddie Mac, Fannie Mae, and Ginnie Mae have in common the purpose of:
replenishing funds of mortgage originators by purchasing their existing mortgage loans
An offer is made on a property listed with broker Green for $93,000. The offer is for $91,000 and the buyer will be obtaining FHA financing. The appraisal comes in at $88,000. What recourse does the buyer have?
The buyer may get an FHA loan provided the difference between the appraised price is paid in cash
Mr. Davis negotiated for a $30,000 loan with $200 monthly principal payments, in addition to a 9% percent interest. What is the monthly interest?
225
(First, take $30,000 and multiply it by 9% for the total annual interest paid, or $2,700. Divide that by 12 (months) for a total of $225 per month interest payment. The $200 principal payment is not interest and does not factor into this calculation)
A builder purchased a lot with seller financing. The seller's loan would allow for a later construction loan to be the priority loan. The loan obtained contained a:
subordination clause
Interim loan/ construction loan mean the same thing. True or False
True
The Martin's have obtained a 30-year loan amortized loan for $80,000 at 10%. The monthly debt service (payment) is $702.06. How much interest is paid during the 30 years?
172,741.60
($702.06 x 360 payments = $252,741.60 (total amount paid over 30 years) - $80,000 loan = $172,741.60 interest paid over 30 years)
Connie is buying a home using FHA financing, the purchase price is $108,000 the maximum LTV is 97.75% What is the minimum down payment Connie can make?
2430
(First take the purchase price of $108,000 X 97.75 = $105,570. Then subtract $105,570 from $108,000 = the down payment $2,430)
In an interest only mortgage none of the principal is paid until the end of the term. True or False
True
The FHA insures loans the VA guarantees loans. True or False
True
Einstein bought a property from Plato. Einstein agreed to pay Plato $1615 per month for the next 15 years. Then the total balance will be due and legal title will change hands at that time. This is called a:
Land contract
A limit on the time period to enforce a legal right is known as:
the statute of limitations
A mortgage that covers several parcels of land and contains a provision that allows for the sale of an individual parcel with clear title is called:
a blanket mortgage
If a non-veteran purchases a property encumbered by a VA-guaranteed loan, the debt can be assumed by the new purchaser. True or False
True
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