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Finance & Mortgages Flashcards

6 cards from real Real Estate practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 6 Finance & Mortgages flashcards as text

  1. A conventional loan is characterized by:

    Answer: No government backing, conforming to Fannie Mae/Freddie Mac guidelines

    Conventional loans are not insured by a government agency and must typically meet conforming limits and standards set by Fannie Mae and Freddie Mac.

  2. VA home loans are exclusively available to:

    Answer: Eligible veterans, active-duty service members, and qualifying surviving spouses

    VA loans are guaranteed by the Department of Veterans Affairs and available only to eligible military borrowers, offering no down payment and no PMI.

  3. Paying 'points' at loan closing means the borrower is:

    Answer: Paying upfront fees to permanently reduce the mortgage interest rate

    Each discount point equals 1% of the loan amount and reduces the interest rate, lowering monthly payments in exchange for a higher upfront cost.

  4. The debt-to-income (DTI) ratio most commonly used by lenders for conventional loans should not exceed:

    Answer: 43%

    Most conventional lenders require a back-end DTI of 43% or less, meaning total monthly debt payments should not exceed 43% of gross monthly income.

  5. In a deed of trust, who holds legal title to the property during the loan term?

    Answer: A neutral third-party trustee

    In a deed of trust, legal title is conveyed to a trustee who holds it on behalf of the lender until the loan is repaid, then reconveyed to the borrower.

  6. A balloon payment mortgage requires the borrower to:

    Answer: Pay a large lump-sum balance at the end of the loan term

    A balloon loan has smaller regular payments but requires the remaining principal balance to be paid in full at the end of a short term.