Real Estate Finance Champions Study Guide Questions And Answers 100% Correct!

VA loan requirements - ANSWERS· Must be honorably discharged · Must meet service requirements · Time frame of service; number of days active duty · Must obtain certificate of eligibility Loan terminology - origination, funding, underwriting, servicing - ANSWERS· Origination: Process of creating a new mortgage loan; includes steps to attract and qualify a borrower · Funding: Process of transferring funds to a title or escrow company for disbursement · Underwriting: Process of evaluating a borrower's loan application to determine the risk involved for the lender · Servicing: Collecting monthly payments, maintaining records of payments and balances, collecting and paying taxes and insurance, remitting funds to the note holder, and following up on delinquencies VA loan terminology - guaranteed, qualification, eligibility, entitlement - ANSWERS· Guaranteed: Partial guarantee on the loan protects the lender against loss if the payments are not made · Qualification: Based upon residual income and debt to income ratio · Eligibility: The Veteran's entitlement to VA home loan benefits under the law, based on military service · Entitlement: The dollar amount the VA will guarantee on each VA home loan and helps to determine how much a veteran can borrow before needing a down payment Primary market vs secondary market - ANSWERS· Primary - where borrowers and mortgage lenders come together to create and negotiate terms of mortgage transactions · Secondary - exists for the purchase and sale of existing mortgages to investors; designed to provide greater liquidity to the residential real estate market by providing for a steady supply of funds from investors Front and back qualifying ratios and calculations - ANSWERS· Front End Ratio: Used to qualify a borrower for a loan based upon the proposed house payment and his or her gross monthly income (GMI). In conventional lending, a front ratio of 28% means that the house payment (PITI) cannot exceed 28% of the borrower's gross monthly income. o 28% × gross monthly income = Max. monthly house payment · Back End Ratio: The ratio of the borrower's total recurring monthly debts, including such obligations as the house payment, payments on all installment debts, monthly payments on all junior liens, alimony, car lease payments, and other recurring payment obligations. In conventional lending, it is usually 36%. Both ratios must be satisfied. o 36% × gross monthly income = Max. PITI and debts per month Loan originator registration system - ANSWERS· Nationwide Mortgage Licensing System and Registry (NMLSR) FHA loan program administrators - ANSWERS· Part of HUD · Started in 1965 · Operates from self-generated income Fair Housing Rules and protected categories - ANSWERS· Race · Color · National origin · Sex · Re