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Question 1

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 6% 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?

Group of answer choices

1.00%

6.00%

12.95%

18.67%

A borrower has secured a 30 year, $150,000 loan at 7% with monthly payments. Fifteen years later, the borrower has the opportunity to refinance with a fifteen year mortgage at 6%. However, the up front fees, which will be paid in cash, are $2,500. What is the return on investment if the borrower expects to remain in the home for the next fifteen years?

Group of answer choices

6.00%

13.00%

22.62%

28.89%

A borrower has 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?

Group of answer choices

$75,000.00

$111,028.00

$126,196.48

$168,646.00

A borrower is purchasing a property for $180,000 and can choose between two possible loan alternatives. The first is a 90% loan for 25 years at 9% interest and 1 point and the second is a 95% loan for 25 years at 9.25% interest and 1 point. Assuming the loan will be held to maturity, what is the incremental cost of borrowing the extra money?

Group of answer choices

13.66%

13.50%

14.34%

12.01%

The market value of a loan is:

Group of answer choices

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

A conforming loan

Group of answer choices

Exceeds the loan limits of loans that Fannie Mae and Freddie Mac can buy

Meets loan limits of loans that Fannie Mae and Freddie Mac can buy

Cannot be purchased by GSEs such as Fannie Mae and Freddie Mac

Is another term for a fixed-rate mortgage loan

Payment to income ratio is BEST described as

Group of answer choices

The factor used to determine if interest on mortgage loans is tax deductible

The only measure of a borrower's 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 organizations provides lenders with complete protection against default losses:

Group of answer choices

FHA

FNMA

FHLMC

VA

A lender requires a 1.20 debt coverage ratio as a minimum. If the net operating income of a property is $60,000, what is the maximum amount of debt service the lender would allow?

Group of answer choices

$30,000

$50,000

$60,000

$72,000

Which of the following is an important aspect of the loan refinance decision process?

Group of answer choices

Terms associated with the existing loan

Terms of the new loan

Fees associated with paying off the old loan and/or acquiring the new loan

All of the above

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