Questions and Answers
Discount points on VA loans can be paid by the:
Constant payments on a loan in which increasing amounts are credited to the principal and decreasing amounts are charged for interest is called:
Most first mortgage loans are exempt from federal usury laws because of:
A type of mortgage loan which provides for payment of interest only during its term is:
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If the current conventional interest rate is 15 3/4%, how many discount points would be charged on a 15% VA loan in order to offset the difference for the lender?
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A man obtained a loan with monthly payments to fully pay it off in 25 years, but calling for the loan to be paid off in 10 years. This mortgage is called a/an:
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Discount points are charged to increase the effective yield:
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In a mortgage, the contract specifies payments of $200 a month, and a final payment of $6,000 at the end of 30 years. The final payment is called a/an:
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A buyer purchases a piece of property and pays equal amounts over 5 years, with a lump sum payment at the end. This loan is a:
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A partially amortized loan is:
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Usury is defined as:
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The interest or value which an owner has in real estate over and above the debt against it is called:
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Discount points are established by:
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A lender making an 80% loan for a property valued at $80,000 and purchased for $70,000 would make a maximum loan of:
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Concerning a fully amortized loan, it is correct to say that it is a loan characterized by:
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One discount point is equal to:
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A buyer obtains an $80,000 mortgage. He pays two discount points. The amount on which his monthly payment is based on is:
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Which of the following is the difference between partially amortized and fully amortized loans?
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Study Notes
VA Loans and Discount Points
- Discount points on VA loans can be paid by either the buyer or the seller.
- Each discount point equals 1% of the loan amount.
Loan Types
- An amortized loan features constant payments that progressively increase the principal payment and decrease the interest.
- A straight loan allows for the payment of interest only throughout its term.
- A partially amortized loan consists of constant payments with a balloon payment at the end.
Mortgage Exemptions
- Most first mortgage loans are exempt from federal usury laws because there are no federal usury laws applicable.
Loan Interest Rates
- A conventional interest rate of 15¾% would require 6 discount points to offset the difference for a 15% VA loan.
Mortgage Payment Structures
- In a mortgage specifying $200 monthly payments and a $6,000 final payment, the final payment is known as a balloon payment.
- A buyer who pays equal amounts over five years but has a lump sum at the end is utilizing a balloon loan.
Usury and Legal Definitions
- Usury is defined as collecting more interest than allowed by law.
- The equity in real estate refers to the owner's interest exceeding the debt against it.
Lender Practices
- The lending institution establishes discount points.
- An 80% loan on a property valued at $80,000 and purchased for $70,000 results in a maximum loan amount of $56,000.
Fully Amortized Loans
- Fully amortized loans have level payments that cover all interest charged and reduce the principal to zero by maturity.
Buyer Scenarios
- A buyer with an $80,000 mortgage who pays two discount points is still based on the entire loan amount of $80,000 for monthly payments.
Loan Characteristics
- Fully amortized loans differ from partially amortized loans as they are extinguished through a series of equal payments rather than a final balloon payment.
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Description
Test your knowledge on VA loans, mortgage types, and payment structures. This quiz covers crucial aspects of discount points and various loan categories. Understanding these concepts is vital for anyone involved in mortgage financing.
