Real Estate Finance Champions Study Guide Exam Questions with complete solutions

VA loan requirements - ANSWER-· 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 - ANSWER-· 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 - ANSWER-· 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 - ANSWER-· 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