Multiple Choice Answers

An APR is required to be disclosed according to ________. settlement cost requirements the lending agreement ARM disclosure requirements Federal Truth-In-Lending Requirements

The market value of a loan is ________. the loan balance times one minus the market rate the loan balance times one minus the original rate the future value of the remaining payments the present value of the remaining payments The present value of the remaining payments

A borrower secured a 30 year, $150,000 loan at 7% with monthly payments. Fifteen years later, an investor wants to purchase the loan from the lender. If market interest rates are 5%, what would the investor be willing to pay for the loan? $75,000 $111,028 $118,478 $126,082

Loan refinancing decisions must consider ________. new loan terms fees associated with paying of an existing loan terms on the existing loan All of the above

A borrower made a mortgage loan 7 years ago for $160,000 at 10.25% interest for 30 years. The loan balance is now $151,806.62 and rates for this amount are currently 9.0% for 23 years. Origination fees and closing costs are $4,500 and closing costs are not financed by the lender. What is the effective cost of refinancing? 9.00% 10.85% 15.32% 9.39%

A loan was made 10 years ago for $140,000 at 10.5% for a 30 year term. Rates are currently 9.25%. What is the market value of the loan? $128,271 $147,600 $139,828 $151,395

A home equity loan is a loan in which a residential property owner can borrow additional funds even if the property has depreciated. borrow additional funds after a property has been owned for some time. borrow additional funds immediately after closing on a first mortgage note. None of the above

In some cases, lenders require that borrowers obtain default insurance. The purpose of such insurance is to ________. decrease the effective interest rate on the loan increase the value of the underlying property protect the borrower from defaulting on the loan protect the lender from losses associated with borrower default on the loan

Payment to income ratio is BEST described as ________. the factor used to determine if interest on mortgage loans is tax deductible the only measure of a borrowers ability to fulfill his or her loan obligations the ratio of the estimated rental income to the expected payments on a rental property the ratio of the expected payments on a property to the income of the borrower

Which of the following groups customarily does NOT attend real estate closing? The buyer and seller The buyer’s and seller’s immediate families Real estate broker(s) Settlement agent(s)

Which of the following is typically NOT one of the settlement costs that are escrowed over the life of the loan? Property taxes Mortgage insurance Selling commissions Hazard insurance

RESPA requires lenders to disclosure to buyers a uniform settlement statement detailing all closing costs within one day before the real estate closing. three days before the real estate closing. one day after loan application. three days after loan application.

If it is found that a loan is over 80% of value during the underwriting process, _______ will be required. additional collateral a higher credit score mortgage insurance None of the above

Which of the following is TRUE concerning Wraparound Loans? The borrower makes payments on existing loan The lender makes payments on existing loan The lender only makes payments on the second mortgage The borrower only makes payments on the second mortgage

A house is for sale for $250,000. You have a choice of two 20-year mortgage loans with monthly payments: (1) if you make a down payment of $25,000, you can obtain a loan with a 7% rate of interest or (2) if you make a down payment of $50,000, you can obtain a loan with a 5% rate of interest. What is the effective annual rate of interest on the additional $25,000 borrowed on the first loan? 1.00% 7.00% 14.00% 19.99%