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WorksheetsFinance Quiz 9-11 Loan Types and Gov. Loans
Total questions: 20
Worksheet time: 10mins
Interest rates are influenced by the Federal Reserve System's:
reserve requirements
primary lending discount rate
open market activities
All choices are correct.
When a loan is amortized, the monthly payments:
Can change each month
Remain the same
The purpose of disclosing the annual percentage rate (APR) is to assist consumers in:
comparing mortgage loans AND seeing one rate that includes both interest and fees
understanding all the risks of the loan terms
The guidelines that determine if a conventional loan is conforming or non-conforming are set by:
Fannie Mae AND Freddie Mac
Fannie Mae AND Farmer Mac
Which type of conventional loans conform to the guidelines set by Fannie Mae and Freddie Mac and thus can be sold on the secondary market?
conforming loans
non-conforming loans
Mitch's ARM has an initial rate of 4.3%. The margin is 2%, and the initial index rate is 2.3%. The initial rate will adjust only once every three years. The lifetime cap is 4%. What is the maximum interest rate that Mitch could pay?
8.3%
6.3%
4.3%
8.3%
If Emmy has a property worth $320,000 with a $65,000 loan, how much equity does she have in that property?
$255,000
$320,000
$65,000
$285,000
Private mortgage insurance protects:
the lender
the borrower
If the buyer with a low credit score is willing to pay a higher rate of interest, what type of mortgages are they able to get?
prime mortgages
reverse mortgages
subprime mortgages
The FHA ____________ loans for qualified U.S citizens and naturalized residents.
insures
funds
sells
processes
The FHA program is funded solely by:
mortgage insurance premiums
taxpayer money
private mortgage insurance
government funding
If a buyer purchased a property for $350,000 with a loan for 100% of the purchase price, which type of loan did they most likely use?
VA
FHA
What is a funding fee charged on VA loans used for?
to cover the cost of administering the VA home loan program
to pay for the mortgage premium at close
to help run the Department of Veterans Affairs
to pay the escrow or title company to reimburse for any closing costs
Which government agency has the following three tools for influencing monetary policy: setting the discount rate, setting reserve requirements, and open-market operations?
Federal Reserve
Treasury Department
FHA and VA are
Conventional Loans
Government Loans
What is the difference between the interest rate of an ARM loan and the index value called?
a discount point
the margin
the cap
the floor
Some FHA lenders have the authority to approve FHA loans in-house. This is called:
direct endorsement
assuming a loan
the secondary mortgage market
an entitlement
What happens to a borrower's PMI when the equity in their property reaches 22%?
It is automatically canceled.
It could be canceled if the borrower requests it.
Debra and Dave are first-time homebuyers. They have okay credit, but don't have a ton of cash for a down payment. Neither has served in the armed services. What kind of loan would they be most likely to utilize?
VA
FHA 203(b)
FHA 203(d)
Jumbo Loan
How does the FHA pay for its loan guarantee program?
Borrowers pay Mortgage Insurance Premium (MIP)
Borrowers pay Private Mortgage Insurance (PMI)
Borrowers pay a funding fee at closing.
Borrower pays a funding fee.
