Podcast
Questions and Answers
What is the fee called when a buyer assumes an FHA loan by paying the seller’s equity and a $300 fee?
What is the fee called when a buyer assumes an FHA loan by paying the seller’s equity and a $300 fee?
- Discount points
- A lock-in fee
- An assumption fee (correct)
- An origination fee
Which of the following considerations would be least important to a lender of real estate mortgage loans?
Which of the following considerations would be least important to a lender of real estate mortgage loans?
- Present value of the subject property
- Borrower's financial assistance needs
- Borrower’s net worth
- Attractiveness of investments in other sectors of the economy (correct)
What document does the broker need to arrange a loan secured by the home?
What document does the broker need to arrange a loan secured by the home?
- Real property security statement (correct)
- Broker’s loan disclosure statement
- Real property securities license
- None of the above
Which of the following is not considered a cost of owning a home?
Which of the following is not considered a cost of owning a home?
In a fully amortized, long-term home mortgage loan with equal monthly payments, what happens to the principal and interest payments over time?
In a fully amortized, long-term home mortgage loan with equal monthly payments, what happens to the principal and interest payments over time?
What does amortization refer to in mortgage payments?
What does amortization refer to in mortgage payments?
Who has the right of rescission when it comes to the Van Burens and the Harrisons in a real estate transaction?
Who has the right of rescission when it comes to the Van Burens and the Harrisons in a real estate transaction?
Under what circumstance does the right of rescission not apply to a loan?
Under what circumstance does the right of rescission not apply to a loan?
As a loan is amortized, what happens to the principal and interest repayment amounts over time?
As a loan is amortized, what happens to the principal and interest repayment amounts over time?
Which factor is a lender least concerned with when assessing the risk posed by potential borrowers?
Which factor is a lender least concerned with when assessing the risk posed by potential borrowers?
What is a distinguishing feature of VA-guaranteed loans?
What is a distinguishing feature of VA-guaranteed loans?
What type of loan involves an interest rate that is periodically adjusted to reflect changes in the cost of money?
What type of loan involves an interest rate that is periodically adjusted to reflect changes in the cost of money?
Which of the following items is not required to be disclosed as finance charges under the Truth in Lending Act?
Which of the following items is not required to be disclosed as finance charges under the Truth in Lending Act?
If a home sells for $290,000 and has been appraised at $286,000, what is the minimum amount of cash a buyer under a VA loan will need to pay at closing?
If a home sells for $290,000 and has been appraised at $286,000, what is the minimum amount of cash a buyer under a VA loan will need to pay at closing?
What is the fee charged to a buyer when assuming an FHA loan called?
What is the fee charged to a buyer when assuming an FHA loan called?
In a fully amortized mortgage, how do the principal and interest payments change over time?
In a fully amortized mortgage, how do the principal and interest payments change over time?
Which of the following statements regarding the right of rescission is accurate?
Which of the following statements regarding the right of rescission is accurate?
Which of these options is not a typical consideration for lenders when assessing real estate mortgage loans?
Which of these options is not a typical consideration for lenders when assessing real estate mortgage loans?
Which factor would a lender be least concerned with when assessing the risk posed by potential borrowers?
Which factor would a lender be least concerned with when assessing the risk posed by potential borrowers?
Which of the following characteristics is true for VA-guaranteed loans?
Which of the following characteristics is true for VA-guaranteed loans?
What typically happens when a home is bought through the California Veterans Farm and Home Purchase Plan?
What typically happens when a home is bought through the California Veterans Farm and Home Purchase Plan?
What type of loan involves an interest rate that is periodically adjusted?
What type of loan involves an interest rate that is periodically adjusted?
Which item is not required to be disclosed as finance charges under the Truth in Lending Act?
Which item is not required to be disclosed as finance charges under the Truth in Lending Act?
What does amortization in a mortgage context refer to?
What does amortization in a mortgage context refer to?
When will a borrower typically need to pay an assumption fee?
When will a borrower typically need to pay an assumption fee?
In the context of loans, what is the distinguishing feature of a growth equity mortgage?
In the context of loans, what is the distinguishing feature of a growth equity mortgage?
For a home selling at $290,000 and appraised at $286,000, what is the minimum cash needed at closing under a VA loan?
For a home selling at $290,000 and appraised at $286,000, what is the minimum cash needed at closing under a VA loan?
Which of the following is true regarding the right of rescission?
Which of the following is true regarding the right of rescission?
When comparing FHA loans with conventional loans, what is a common difference regarding interest rates?
When comparing FHA loans with conventional loans, what is a common difference regarding interest rates?
What effect does amortization have on loan payments over time?
What effect does amortization have on loan payments over time?
Which of the following types of loans is least likely to require a downpayment from a borrower?
Which of the following types of loans is least likely to require a downpayment from a borrower?
Which of the following would be least relevant for a lender assessing a mortgage application?
Which of the following would be least relevant for a lender assessing a mortgage application?
What is generally expected of a buyer assuming an FHA loan?
What is generally expected of a buyer assuming an FHA loan?
Flashcards
Deed of trust
Deed of trust
A deed of trust is a document that secures a loan with real estate as collateral. It's used in California for most home loans.
Origination Fee
Origination Fee
This is a fee charged by the lender to cover the costs involved in processing a new loan.
Amortization
Amortization
Amortization is the process of gradually paying off a loan over time through regular payments. Each payment includes both principal and interest.
Depreciation
Depreciation
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Deferred Maintenance
Deferred Maintenance
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What is a VA-guaranteed loan?
What is a VA-guaranteed loan?
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What is an adjustable-rate mortgage (ARM)?
What is an adjustable-rate mortgage (ARM)?
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What is the Truth in Lending Act?
What is the Truth in Lending Act?
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What is a down payment?
What is a down payment?
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What is the difference between a property’s appraised value and its selling price?
What is the difference between a property’s appraised value and its selling price?
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Present Value of the Property
Present Value of the Property
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Borrower's Net Worth
Borrower's Net Worth
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Attractiveness of Other Investments
Attractiveness of Other Investments
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Real Estate Broker's Role
Real Estate Broker's Role
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Real Property Security Statement
Real Property Security Statement
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Down payment
Down payment
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Adjustable-rate mortgage (ARM)
Adjustable-rate mortgage (ARM)
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Truth in Lending Act
Truth in Lending Act
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Difference between appraised value and selling price
Difference between appraised value and selling price
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What is a real estate broker's role?
What is a real estate broker's role?
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Present Value of the Subject Property
Present Value of the Subject Property
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Attractiveness of Investments in Other Sectors
Attractiveness of Investments in Other Sectors
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What is Amortization?
What is Amortization?
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What is the Right of Rescission?
What is the Right of Rescission?
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Study Notes
Chapter 10 Quiz - Key Concepts
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Veteran Home Purchases: California Veterans use a specific plan for home purchases (Cal-Vet). The plan involves a land contract where the state initially holds title.
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Loan Approvals: Buyers assuming an FHA loan may have to pay an assumption fee and meet FHA standards, including intending to reside in the home as their primary residence.
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Loan Costs: Costs of owning a home include things like amortization, deferred maintenance, depreciation, and loss of income from capital investment. Lenders are less concerned about a borrower's overtime or temporary income than their stable monthly income. Wife's credit history, in addition to total liabilities and part-time income, are crucial factors for lenders evaluating risk.
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VA-Guaranteed Loans: A distinguishing feature of VA-guaranteed loans is that they typically don't require a down payment. However, if the loan exceeds the maximum guaranty amount, a downpayment may still be required.
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Right of Rescission: If a loan is a purchase money loan (mortgages for purchasing a house), the right of rescission applies to the Truth in Lending Act. Rescission does not apply to business loans secured by a residence.
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Mortgage Payments: In a fully amortized mortgage, the amount applied towards principal increases each month, while the interest portion decreases.
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Loan Security: Federal notices of the right of rescission must be provided if the loan is secured by the borrower's residence, but not for commercial or agricultural loans.
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Loan Types and Downpayments: Different types of loans (conventional, FHA, VA, Cal-Vet) have varying requirements regarding down payments. Conventional loans tend to require lower loan to value ratios compared to FHA loans. Cal-Vet loans are least likely to require a downpayment.
Applying for a Residential Loan - Additional Concepts
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Graduated Payment Mortgages (GPMs): Loans with interest rates and/or payments that adjust periodically based on market interest rates.
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Truth in Lending Act (TILA) and Finance Charges: Finance charges include appraisal fees, origination fees, and discount points. These are required to be disclosed under TILA. Fees for an appraisal are not considered a finance charge.
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VA Loan Appraisals: VA loans are guaranteed up to the appraised value of the property. Any difference between the appraised value and the sale price must be covered by the borrower.
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Lender Considerations: A lender's primary concern is whether the loan will be a worthwhile investment, factoring in factors like present value of the property, borrower's financial stability, and attractiveness of other investments.
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Real Estate Broker's Role in Loan Transactions: Real Estate brokers need to use a real estate property security statement document to complete a loan transaction when a home is used as collateral to secure a loan. A disclosure statement regarding all loan costs is also required when providing loan services.
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Conventional Loans vs FHA Loans: Conventional loans generally have lower loan-to-value ratios relative to FHA loans. The latter has higher risks and requires more extensive borrower protections and guarantying.
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Description
Test your knowledge on the key concepts related to California veterans' home purchase plans, including VA-guaranteed loans, loan approvals, and associated costs. This quiz covers important factors that lenders consider when evaluating home loan applications. Enhance your understanding of the unique aspects of veteran home buying in California.
