RE Finance Ch.12 Flashcards
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RE Finance Ch.12 Flashcards

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Questions and Answers

Who of the following is probably not eligible for a VA-guaranteed loan?

  • A National Guard member on active duty
  • A veteran with a dishonorable discharge
  • A sergeant serving in the reserves
  • A soldier 70 days into his first tour of duty (correct)
  • Which of the following would not be available through the VA loan program?

  • Owner-occupied residence loan
  • Refinance loan
  • An investor loan (correct)
  • VA guaranteed loan
  • Which of the following factors would, without any other compensating factors, allow approval of a VA loan where the borrower's income ratio is too high?

  • Residual income at least 20% over the required minimum (correct)
  • Savings account balance
  • Good credit history
  • Age of the borrower
  • If a loan amount is between $144,001 and $453,100, what is the maximum guaranty amount?

    <p>25% of the loan amount</p> Signup and view all the answers

    How is a veteran's full guaranty entitlement restored?

    <p>The veteran sells the property and repays the loan in full from the proceeds</p> Signup and view all the answers

    What is the residual income of the Evans family with a monthly income of $5,000 and specific obligations?

    <p>$1,870</p> Signup and view all the answers

    Who originates a VA-guaranteed loan?

    <p>An institutional lender</p> Signup and view all the answers

    What is the term for the guaranty amount available to a particular veteran?

    <p>Entitlement</p> Signup and view all the answers

    What is the guaranty amount for Tim and Teri, who are both veterans buying a $450,000 house?

    <p>$113,275</p> Signup and view all the answers

    A VA borrower may use secondary financing to cover a downpayment if:

    <p>All of the above</p> Signup and view all the answers

    VA loans are easier to qualify for, compared with conventional or FHA loans.

    <p>True</p> Signup and view all the answers

    What is the standard maximum debt to income ratio for a VA borrower?

    <p>41%</p> Signup and view all the answers

    Who may assume a VA loan?

    <p>Anyone who is creditworthy</p> Signup and view all the answers

    What is the maximum percentage of sales concessions in a transaction involving a VA loan?

    <p>4%</p> Signup and view all the answers

    What is the funding fee for a veteran borrower who was a member of the regular military and obtains a no-downpayment VA loan for $100,000?

    <p>$2,150</p> Signup and view all the answers

    Which of the following would not be a compensating factor that would help a VA loan applicant who has inadequate income?

    <p>Long-term employment</p> Signup and view all the answers

    How large a downpayment will a VA borrower need to make if buying a $500,000 home and having a full entitlement of $113,275?

    <p>$11,725</p> Signup and view all the answers

    What are the maximum monthly total obligations for the Evans family to qualify for a VA loan?

    <p>$2,050</p> Signup and view all the answers

    The document issued by a VA-approved appraiser which sets forth the value of a property is known as a:

    <p>Either B or C</p> Signup and view all the answers

    The borrower will make annual mortgage insurance payments on a VA loan.

    <p>False</p> Signup and view all the answers

    Study Notes

    VA-Guaranteed Loans Overview

    • VA-guaranteed loans do not typically support investor loans, focusing on veterans and eligible borrowers.
    • An eligible borrower could be denied a VA loan if their income ratio exceeds limits, but residual income exceeding the required minimum by 20% could compensate.

    Loan Amounts and Guaranty

    • For loan amounts between $144,001 and $453,100, the maximum guaranty is 25% of the loan.
    • A veteran's full guaranty entitlement is restored upon selling the property and repaying the loan in full.

    Residual Income Calculation

    • The Evans family's monthly obligations total $2,130, leading to a residual income of $1,870 from their $5,000 monthly income.
    • To qualify for a VA loan, the maximum total obligations cannot exceed $2,050 for the Evans family without compensating factors.

    Loan Originators and Entitlements

    • VA loans are originated by institutional lenders.
    • The term "entitlement" refers to the guaranty amount available to a veteran.

    Borrower Scenarios

    • Tim and Teri, both veterans, have a maximum guaranty of $113,275, which will apply to their house purchase of $450,000.
    • Secondary financing for down payments is permissible if certain conditions regarding income, restrictions, and total financing compared to appraised value are met.

    Qualifying Characteristics

    • VA loans are generally easier to qualify for compared to conventional or FHA loans.
    • The standard maximum debt-to-income ratio for a VA borrower is set at 41%.

    Loan Assumption and Sales Concessions

    • VA loans can be assumed by any individual who is deemed creditworthy.
    • Sales concessions in VA loan transactions cannot exceed 4% of the property’s appraised value.

    Funding Fees and Down Payments

    • A regular military veteran obtaining a no-downpayment VA loan for $100,000 incurs a funding fee of $2,150.
    • A VA borrower purchasing a $500,000 home in a non-high-cost county will need to provide a down payment of $11,725.

    Appraisal and Loan Characteristics

    • Appraisal documentation for VA loans is provided as a Certificate of Reasonable Value or a Notice of Value.
    • VA loans do not require borrowers to make annual mortgage insurance payments, distinguishing them from other loan types.

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    Description

    Test your knowledge on VA-guaranteed loans with these flashcards from Chapter 12 of RE Finance. This quiz covers eligibility requirements, loan types, and borrower factors affecting loan approval. Perfect for anyone studying real estate finance!

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