General Mortgage - Part 3

MIP is required for FHA loans….

With an LTV of less than or equal to 90%, for the first 11 years of the loan term or until the end of the loan term, whichever comes first.  With an LTV of greater than 90%, for the first 30 years of the loan term or until the end of the loan term, whichever comes first.

 “APR” is defined as…

A uniform measurement of the cost of a loan, including interest and financed closing costs, expressed as a percentage.

Borrowers earning more than 25% commission must…

Provide up to two years of tax returns for income qualification.

USDA makes loans for properties located in…

Rural areas. Loans under the USDA’s Rural Development Housing & Community Facilities Programs are made for the purpose of assisting low-income borrowers to purchase homes in rural areas.

A review of a borrower’s credit history looks at…

Credit capacity and credit character. These answer the questions of whether the borrower is both willing and able to repay the loan.

VA direct loans are…

Safe harbor qualified mortgages.

YSP is historically defined as…

A payment made by a lender to a loan originator for originating a loan at a rate higher than the par rate.

What is the marketplace for mortgage-backed securities?

The secondary market. The secondary market helps fund the primary market where loans are made to borrowers.

FHA loans require a minimum borrower investment of…

3.5%. FHA loans also require upfront and annual MIP.

FHA’s primary fixed-rate program is…

Called 203(b). It is used to purchase or refinance one- to four-unit family dwellings.

What is a note?

A legal document that obligates a borrower to repay a loan. It specifies the terms by which the repayment will occur. It may also be called a promissory note.

The Department of Veterans Affairs…

Guarantees loans. VA loans provide a guaranty to lenders for a certain percentage of the loan amount.

FHA 2-1 buy-downs require borrowers to…

Qualify at the note rate. However, funds placed in an escrow account will allow them to pay a discounted monthly payment based on a lower interest rate for two years - 2% in the first year and 1% the second year.

To qualify for a VA loan, a veteran must obtain a…

Certificate of Eligibility. Eligibility is based on length of service. COEs are not issued to veterans who are dishonorably discharged.

The amount of the VA funding fee depends on…

The type of loan and whether the veteran’s eligibility has been used before. Disabled veterans are generally exempt from paying the funding fee.

Origination fees on VA loans are…

Limited to 1%. There are limitations on certain types of charges, and closing costs cannot be financed in purchase transactions.

VA underwriters use a debt ratio of…

41%. The VA only looks at the total debt ratio. However, underwriters do look at the veteran’s residual income for qualification purposes.

What are discount points?

Discount points are used to adjust the price of a loan. One discount point is equal to 1% of the loan amount.

The VA loan guaranty is based on a veteran’s…

Entitlement. VA guarantees a loan amount four times greater than the eligibility listed on the veteran’s Certificate of Eligibility.

USDA loans are made for a term of…

30 years, offered in a fixed rate only. They do not require a down payment, but lenders must use debt ratios to ensure the borrower can repay the loan.