Quiz 8

• Loan amounts are calculated based on home value, appraised value, and loan-to-value (LTV) ratio.
• LTV is the ratio of a loan to the value of an asset (property) purchased.
• Loan amount is home or appraised value (whichever is lower) multiplied by the LTV.
• A fixed-rate mortgage is suitable for those planning to stay in a home for an extended period.
• Assignment is the transfer of a right or contract from one person to another.
• The 30-year fixed mortgage is the most commonly used mortgage in the residential real estate market.
• The person listed on the deed is required to sign the mortgage.
• A mortgage payment typically comprises interest, principal, and taxes (PITI).
• A 3/1 ARM (adjustable-rate mortgage) typically has the lowest initial interest rate.
• Default is the failure to pay back a loan.
• Cooperative mortgage payments include PITI in addition to maintenance payments.
• A package mortgage finances the purchase of a home along with personal items such as appliances.
• Redlining is an illegal practice where a lender refuses to lend money in a specific area.
• Banks review property condition, sales comparables, and marketable title to determine a property's lending value.
• A release clause in a blanket mortgage allows the owner to pay off a portion of the mortgage and free that part of the property from the mortgage.
• An FHA (Federal Housing Administration) mortgage is suitable for first-time homebuyers who lack funds for a large down payment.
• RESPA (Real Estate Settlement Procedures Act) is a consumer protection statute passed in 1974.
• A shared equity mortgage involves joint ownership of real estate by both lenders and property dwellers.
• A borrower is required to pay a late charge if a mortgage payment is made after the grace period.
• VA (Veterans Affairs), FHA, and FmHA (Farmers Home Administration) loans are insured or guaranteed by a government agency.
• Buydown refers to obtaining a lower interest rate by paying additional points to the lender.
• A typical margin in an adjustable-rate mortgage is 2.75%.
• A 30-year fixed amortization term will yield the lowest monthly payment.
• A "Due on Sale" Clause allows a lender to require the balance of a loan to be paid in full if the collateral is sold.
• In a 3/1 ARM, the interest rate is fixed for 3 years.
• In a 10/1 ARM, the interest rate is fixed for 10 years.
• A construction mortgage funds the construction of improvements or buildings on a property.
• A wrap-around mortgage is when the seller extends to the buyer a junior mortgage that wraps around the existing mortgage.
• The "Due on Sale" clause takes effect if ownership of the property is changed.
• Acceleration Clause is the term given to the practice of paying off a mortgage loan faster than required by terms of the mortgage agreement
• Alienation is another term used in a "Due on Sale" Clause that allows a lender to require the balance of a loan to be paid in full if the collateral is sold.
• An adjustable-rate mortgage is suitable for those planning to live in a home for a shorter period (3-5 years).
• A bridge loan is typically taken out for a period of two weeks to three years.
• A promissory note is a signed document containing a written promise to pay a stated sum to a specified person/institution or the bearer at a specified date
• Typical clauses found in most mortgages include acceleration, alienation, and defeasance clauses.
• A mortgage payment does NOT include a rebate.
• Parties typically attending the closing of a property include the seller's attorney, title company representative, and lender's representative.
• Banks use assets, income, and credit to determine if a borrower is qualified to obtain a mortgage.
• Lenders typically use the market approach valuation method when determining the value of a property.
• Inflation is the rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling.
• A mortgage may be obtained from a commercial bank, mortgage broker, or credit union.
• A reverse annuity mortgage is typically offered to seniors.
• A defeasance clause is a typical clause encountered when reviewing a mortgage.
• A marketable title clause ensures that the borrower will maintain clear title on the property in the event the bank is forced to foreclose.
• Defaulting on mortgage happens when struggling to make payments and are nearly 3 months late on the mortgage.
• A pledged account mortgage is a mortgage with a dedicated savings account, which earns interest, that is used to gradually reduce mortgage payments.
• An adjustable rate mortgage is a mortgage loan in which the interest rate on the note periodically adjusts based on an index.
• Grace Period is the time past the deadline for an obligation during which a late penalty that would have been imposed is waived
• A reverse annuity mortgage is a form of mortgage in which the lender makes periodic payments to the borrower using the borrower’s equity in the home as satisfaction of mortgage.
• PMI (Private Mortgage Insurance) is calculated into a monthly mortgage payment.
• A VA Mortgage is a mortgage loan designed to offer long-term financing to eligible American veterans.

Explore mortgage calculations based on home value, appraised value, and loan-to-value (LTV) ratio. Understand fixed-rate mortgages, assignment, and the components of a typical mortgage payment (PITI). Learn about different mortgage types, including 3/1 ARMs and package mortgages.