Mortgage Fundamentals

What is the benefit of Mortgage Insurance (MI) for the Lender?

Risk protection

The borrower will put down more than 20%

More money for the lender

It is optional

What are the 3 C's

Credit, Capacity, Character

Credit, Capacity, Capital

Credit, Capacity, Collateral

What is the Appraisal?

Describes the Property

Estimates Value

Positive and Negative factors of property

Gives opinion of home and condition

What is DTI

Debt to Income

Debt towards Insurance

Down Payment Towards Insurance

Designation towards Income

Which is the correct formula to calculate LTV?

Property Value/Original Loan

Original Loan x Property Value

Original Loan/ Property Value

Property Value+ Original Loan

What is the formula for DTI?

All monthly expenses/Total Income

Monthly Debt / Total Income

Mortgage+Groceries+Gas/Total Income

Income/ Mortgage Payment

A 5/6 ARM is adjusted how often (after first 5 year years)

6 years

5 years

6 months

5 months

Calculate the DTI: PITIA-$857.00, Auto Loan-$400.00, CC Debt-$350, Income-$4,000

40.17%

59.83%

40%

60%

Calculate LTV. Home Value-$200,000.00, Down Payment-$40,000.00, Loan Amount-$160,000.00

60%

70%

80%

90%

What is the role of the underwriter?

Evaluates financial information and credit

Verifies employment

Chooses to approve or Decline

Signs Documents

What is the role of the Loan servicer?

An Investment Property is

Bought by an Investor

Income-producing property

In another country

Sold only when an investor puts a down payment of over 20%

Where does the mortgage process begin?

Borrower begins to look at Zillow for homes for sale

Borrower begins speaking with an MLO

Borrower sells their current home

Borrower gets a credit report

Which is the correct order of our process?

Borrower, Disclosures, Underwriting, Quality Control, Closing, Closing Day, Servicing, Post Closing

Borrower, Disclosures, Quality Control, Underwriting, Closing, Day, Closing, Servicing, Post Closing

Borrower, Disclosures, Underwriting, Quality Control, Closing, Closing Day, Post Closing, Servicing

Borrower, Disclosures, Underwriting, Quality Control, Post Closing, Closing Day, Closing, Servicing

If Judy closed on her home June 14th when is her first Mortgage Payment Due?

July 1st

June 14th

August 1st

September 1st

P&I stands for

Property and Insurance

Principal and Investment

Principal and Interest

Property and Investment

ATR means

Amortization to return

Ability to repay

Actual Type Residency

Ability to Refinance

Dan has a loan balance of $140,000.00 and gets an appraisal of his property which is valued at $400,000.00. Calculate the LTV

65%

30%

35%

60%

Frank wants to buy a home in Florida but he knows he will be relocating for work in 4 years. Which is better?

Fixed-rate

ARM

When a borrower takes out a mortgage the collateral for the loan is the ______

Mortgage Insurance

Down Payment

Property

Escrow Account

What will a property go into foreclosure?

60 days- 2months

90 days- 3 months

When the borrower loses his job

After a 15 day late payment

Freddy is considering refinancing but he want's to know how much equity he has in his property. His original property value is $720,000.00. He has paid off 70,000 over 10 years and placed a $50,000 down payment. The current market value of his home is 890,000. What is his current equity?

13.48%

16.67%

20.12%

65.16%

Mortgage Fundamentals

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