Deck 10: Financing

Question 1

A discount point is equal to:

A) 1 percent of the loan amount
B) 1 percent of the purchase price
C) 1.25 percent of the loan amount

Answer 1

A

Question 2

A         is a fee charged by a lender to process a loan application.

Answer 2

loan origination fee

Question 3

A ___ states the maximum available loan guaranty entitlement for a veteran.

Answer 3

certificate of eligibility

Question 4

Explain the way adjustable-rate loans work.

Question 5

The payment of mortgage insurance premiums is required when taking out a:

A) conventional loan
B) FHA loan
C) VA loan

Question 6

In a title theory state, the title to the real property vests in the lender until the loan obligation is satisfied.

Question 7

Explain the purpose of the Federal Truth in Lending Act.

Question 8

Explain the difference between title theory and lien theory states.

Question 9

A loan payment that is composed of principal, interest, taxes, and insurance is referred to as         .

Question 10

Insurance companies invest primarily in large commercial and industrial loans.

Question 11

Explain the similarities and differences between FHA and VA loans.

Question 12

The period between one rate change and the next is referred to as the ____.

Question 13

Savings and loan associations are the major source of construction loans and short-term loans.

Question 14

A loan in which level payments are made throughout the life of the loan is called:

A) an amortized loan
B) a conventional loan
C) a straight loan

Question 15

The following is a three-party instrument:

A) promissory note
B) mortgage
C) deed of trust

Question 16

The ___ is a federal law that establishes rules for homeowners who wish to cancel their PMI.

Question 17

Savings and loan associations primarily make conventional loans.

Question 18

What financial sources are available to a prospective borrower seeking financing?

Question 19

The clause that gives the trustee of a deed of trust the right to sell the property at public auction if the borrower defaults on his or her loan obligation is the:

A) due-on-sale clause
B) power-of-sale clause
C) buy-down clause

Question 20

A promissory note is a personal obligation.