Level 23: Mortgage Brokers - Chapter 1:
Mortgage Origination
Chapter 1 Key Terms - correct answer ✔✔✏️pre-qualification: the first step in the loan application
process in which lenders give prospective borrowers a general estimate of the loan amount for which
they may be approved; based on information reported by the borrower
✏️pre-approval: official process of a borrower being approved by a lender to borrow a specific amount
at an interest rate within a small range; a mortgage application, credit report, and supporting financial
documentation are required
✏️rate lock: an agreement between a lender and a borrower that allows the borrower to secure the
interest rate on a mortgage for a designated time period
✏️mortgage commitment: a lender's approval of a specific loan for a specific property
✏️pre-application and fee agreement: an optional form used by mortgage brokers to communicate fees
and make required disclosures to loan applicant(s)
✏️underwriting: the process of deciding the level of risk a lender would take on by offering a loan to a
certain borrower for a specific property
✏️lender rebate: a credit given by the lender to the borrower that may be used to pay third party
settlement charges or to fund the escrow account; generally paid for by borrowers in the form of a
higher interest rate
Real Estate Financing - correct answer ✔✔Some people are able to pay cash for a new home, but the
reality is that most buyers need to borrow a lot of money in order to buy real estate. The methods of real
estate finance are many and varied.
Consumers in this country and in this day and age are extremely familiar with the credit system. Most of
us have credit cards that allow us to purchase items immediately and pay for them later or over an
extended period of time. Real estate financing is the same concept on a larger scale. 💳
The real estate finance industry is a big business. It includes commercial banks, mortgage companies,
mortgage brokers, mortgage bankers, correspondent lenders*, credit unions, savings and loans, and
more.
*Similar to a mortgage banker, a correspondent lender offers loans using their own money at their own
risk. The difference is that a correspondent lender generally works on a smaller scale than mortgage
brokers and bankers.
, Real estate financing necessitates many different jobs. From qualifying the borrower and qualifying the
property in the underwriting process to providing various types of financing and closing services, a great
deal of skilled work must be done to get a single house sold.
People who work in the finance field (or closely alongside it, like you) must know the effects of
significant federal legislation and the nature of finance.
Your Need to Know - correct answer ✔✔Although a license holder is not directly involved in approving
the buyer's loan, you'll still want to understand and be able to explain the loan approval process to your
client. That way, you can answer your client's questions and look out for their interests.
You and the lender should work together to make this experience as understandable and smooth as
possible.
Prepared Buyers - correct answer ✔✔If you're a buyer's agent, it's particularly important for you to make
sure your buyers are as knowledgeable and prepared as possible before you start showing them
properties.
If a buyer can only borrow enough money to afford a $200,000 house and you're showing them
$300,000 houses all afternoon, everyone's time is wasted. ⏱
When you first take on a new buyer client, make sure they connect with a lender and get pre-approved
for a loan before you start picking out properties.* First-time buyers may not know about this step, or
they may be poorly guessing their budget by looking at estimated monthly payments online. Loan details
are highly personalized, so seeing an example of the terms for someone with excellent credit who is
putting 20% down can be misleading for many buyers.
*You can provide them with a list of lenders to choose from, but do not insist on them using a specific
lender.
Pre-Qualification and Pre-Approval - correct answer ✔✔Pre-qualification and pre-approval are not the
same thing.
Pre-qualification is the first step in the loan application process in which lenders give prospective
borrowers a general estimate of the loan amount for which they may be approved. It's based on
information reported by the borrower. The buyer supplies info about their financial situation to the
lender, who then provides a general estimate.
Pre-approval is the official process of a borrower being approved by a lender to borrow a specific
amount at an interest rate within a small range. A mortgage application, credit report, and supporting
Mortgage Origination
Chapter 1 Key Terms - correct answer ✔✔✏️pre-qualification: the first step in the loan application
process in which lenders give prospective borrowers a general estimate of the loan amount for which
they may be approved; based on information reported by the borrower
✏️pre-approval: official process of a borrower being approved by a lender to borrow a specific amount
at an interest rate within a small range; a mortgage application, credit report, and supporting financial
documentation are required
✏️rate lock: an agreement between a lender and a borrower that allows the borrower to secure the
interest rate on a mortgage for a designated time period
✏️mortgage commitment: a lender's approval of a specific loan for a specific property
✏️pre-application and fee agreement: an optional form used by mortgage brokers to communicate fees
and make required disclosures to loan applicant(s)
✏️underwriting: the process of deciding the level of risk a lender would take on by offering a loan to a
certain borrower for a specific property
✏️lender rebate: a credit given by the lender to the borrower that may be used to pay third party
settlement charges or to fund the escrow account; generally paid for by borrowers in the form of a
higher interest rate
Real Estate Financing - correct answer ✔✔Some people are able to pay cash for a new home, but the
reality is that most buyers need to borrow a lot of money in order to buy real estate. The methods of real
estate finance are many and varied.
Consumers in this country and in this day and age are extremely familiar with the credit system. Most of
us have credit cards that allow us to purchase items immediately and pay for them later or over an
extended period of time. Real estate financing is the same concept on a larger scale. 💳
The real estate finance industry is a big business. It includes commercial banks, mortgage companies,
mortgage brokers, mortgage bankers, correspondent lenders*, credit unions, savings and loans, and
more.
*Similar to a mortgage banker, a correspondent lender offers loans using their own money at their own
risk. The difference is that a correspondent lender generally works on a smaller scale than mortgage
brokers and bankers.
, Real estate financing necessitates many different jobs. From qualifying the borrower and qualifying the
property in the underwriting process to providing various types of financing and closing services, a great
deal of skilled work must be done to get a single house sold.
People who work in the finance field (or closely alongside it, like you) must know the effects of
significant federal legislation and the nature of finance.
Your Need to Know - correct answer ✔✔Although a license holder is not directly involved in approving
the buyer's loan, you'll still want to understand and be able to explain the loan approval process to your
client. That way, you can answer your client's questions and look out for their interests.
You and the lender should work together to make this experience as understandable and smooth as
possible.
Prepared Buyers - correct answer ✔✔If you're a buyer's agent, it's particularly important for you to make
sure your buyers are as knowledgeable and prepared as possible before you start showing them
properties.
If a buyer can only borrow enough money to afford a $200,000 house and you're showing them
$300,000 houses all afternoon, everyone's time is wasted. ⏱
When you first take on a new buyer client, make sure they connect with a lender and get pre-approved
for a loan before you start picking out properties.* First-time buyers may not know about this step, or
they may be poorly guessing their budget by looking at estimated monthly payments online. Loan details
are highly personalized, so seeing an example of the terms for someone with excellent credit who is
putting 20% down can be misleading for many buyers.
*You can provide them with a list of lenders to choose from, but do not insist on them using a specific
lender.
Pre-Qualification and Pre-Approval - correct answer ✔✔Pre-qualification and pre-approval are not the
same thing.
Pre-qualification is the first step in the loan application process in which lenders give prospective
borrowers a general estimate of the loan amount for which they may be approved. It's based on
information reported by the borrower. The buyer supplies info about their financial situation to the
lender, who then provides a general estimate.
Pre-approval is the official process of a borrower being approved by a lender to borrow a specific
amount at an interest rate within a small range. A mortgage application, credit report, and supporting
