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Questions and Answers
Discount points on VA loans can be paid by the:
Discount points on VA loans can be paid by the:
- Buyer only
- Lender only
- Seller only
- Buyer or seller (correct)
Constant payments on a loan in which increasing amounts are credited to the principal and decreasing amounts are charged for interest is called:
Constant payments on a loan in which increasing amounts are credited to the principal and decreasing amounts are charged for interest is called:
- A variable constant loan
- A variable loan
- A straight loan
- An amortized loan (correct)
Most first mortgage loans are exempt from federal usury laws because of:
Most first mortgage loans are exempt from federal usury laws because of:
- A 1980 federal exemption
- A 1980 multi-state decision to ban them
- Consumer need to get loans
- There are no federal usury laws (correct)
A type of mortgage loan which provides for payment of interest only during its term is:
A type of mortgage loan which provides for payment of interest only during its term is:
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?
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?
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:
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:
Discount points are charged to increase the effective yield:
Discount points are charged to increase the effective yield:
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:
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:
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:
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:
A partially amortized loan is:
A partially amortized loan is:
Usury is defined as:
Usury is defined as:
The interest or value which an owner has in real estate over and above the debt against it is called:
The interest or value which an owner has in real estate over and above the debt against it is called:
Discount points are established by:
Discount points are established by:
A lender making an 80% loan for a property valued at $80,000 and purchased for $70,000 would make a maximum loan of:
A lender making an 80% loan for a property valued at $80,000 and purchased for $70,000 would make a maximum loan of:
Concerning a fully amortized loan, it is correct to say that it is a loan characterized by:
Concerning a fully amortized loan, it is correct to say that it is a loan characterized by:
One discount point is equal to:
One discount point is equal to:
A buyer obtains an $80,000 mortgage. He pays two discount points. The amount on which his monthly payment is based on is:
A buyer obtains an $80,000 mortgage. He pays two discount points. The amount on which his monthly payment is based on is:
Which of the following is the difference between partially amortized and fully amortized loans?
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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