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C9 Finance

CA Real Estate Practice- Understanding the Process of Finance

Trustor party borrowing money
Beneficiary lender
Trustee Third party who holds naked legal title to property
Interest the cost of borrowing money
Loan Origination Fee charge based on loan amount and is collected as compensation by lender for processing the loan
Prevailing Market Rate interest rate charged on conventional loans
Examples of Institutional Financing savings banks, commercial banks, life insurance companies
Examples of Non-Institutional Financing private individuals, credit unions, investments trusts, mortgage companies, pensions plans, land contracts
Examples of Government Financing FHA (insured), VA (guaranteed), CalVet (land)
APR rate that represents relationship of total finance charges and total amount financed as a percentages (actual cost of borrowing money)
Within how many years is a Prepayment Penalty enforceable? first 5 years of a one-to-four unit home loan
Impound Account prepaid items consisting of property taxes, hazard insurance, mortgage insurance reserves
Mortgage Broker earns a fee from borrower by shopping for lenders for them
Prime Loan loan to borrowers on well-located properties with good income and credit (interest rate of 2-7%)
Savings banks usually make which kinds of loans? residential
Commercial banks usually make which kinds of loans? general purpose: business, auto, FHA/VA, credit cards, construction
Life insurance companies usually make which kinds of loans? big money: shopping centers, office buildings, hotels
What is the FICO score of a Subprime Borrower 650 or below
A borrowers total mortgage should not exceed what percent of their gross income? 25-30%
Adjustable Rate Mortgages (ARMs) are usually based upon...? index
Negative Amortization monthly payments are insufficient to pay interest so that unpaid interest is added to principal
Secondary Mortgage Market financial institutions buy & sell first mortgages to and from other financial institutions
What does Fannie Mae (FNMA) stand for? Federal National Mortgage Association
Jumbo Loan loan amount higher than Fannie Mae & Freddie Mac loan limit
Name the 3 primary sources of government financing FHA, VA, and CalVet
Certificate of Reasonable Value (CRV) appraisal of property a veteran wishes to buy
Formula for Qualifying a Buyer is... gross monthly income x 43% - fixed debt
Truth in Lending Act (Regulation Z) lets borrowers and clients know the cost of credit so they can compare
Junior Loans / Secondary Financing secured by a second trust deed or mortgage and any other loans on a property that come after the first or prime security
Alienation Clause if property is sold or default occurs, the entire note becomes due and payable (ARMs fully assumable)
Balloon Payment junior trust deed loans that are not self-amortizing will require large payment to satisfy remainder of loan
Land Contract (contract of sale) seller retains legal title until buyer has paid most or all
Loan Assumption buyer pays part or all equity and assumes responsibility of existing loan
Equity difference between market value and existing loan(s)
Subject To agreement to take over and make loan payments or lose property
Taking title "subject to" can trigger which clause? Alienation Clause
Which loans are usually not assumable? conventional fix loans
Licensed agents who can negotiable mortgage loans for a fee must obtain what first from CalBRE? MLO License Endorsement
How long must you keep a Mortgage Loan Disclosure Statement (MS)? 3 years
Usury a charge more than legally permitted percent of interest
Real Estate Owned (REO) Property property which is in possession of lender as a result of foreclosure
Short Sale lender accepts less than what is owed on a loan
Created by: lbrito0610