The Application Process

Question 1

______ are individuals who work for banks and other financial institutions with the main objective to recommend individual and business loan applications for approval
A: Lending Officer
B: Loan Officer
C: Mortgage Managers
D: None Of The Above

Answer 1

B: Loan Officer

Question 2

Pre-Qualified

Answer 2

• This is the first step in the house buying process.
• To be pre-approved for a mortgage means that a bank or lender has investigated your credit history and determined you are an eligible candidate for a mortgage.
• Pre-approvals might only be good for a certain amount of time

Question 3

What is Loan Officer?

Answer 3

• Loan officers specialize in consumer, mortgage or commercial loans
• They are the liaison between the bank(institution) and the applicant of the loan
• The loan officer seeks to find an arrangement that is best for all parties in the transaction
• The loan officer overlooks all aspects of the loan application (income, credit, assets, debit- how likely can someone repay the debit)

Question 4

Mortgage

Answer 4

A legal agreement by which a bank or other creditor lends money at interest in exchange for taking title of the debtor’s property, with the condition that the conveyance of title becomes void upon the payment of the debt.

Question 5

Pre-Qualified

Answer 5

• This is the first step in the house buying process.
• To be pre-approved for a mortgage means that a bank or lender has investigated your credit history and determined you are an eligible candidate for a mortgage.
• Pre-approvals might only be good for a certain amount of time

Question 6

Pre-Approval

Answer 6

In order for your loan representative to submit your application for pre-approval, you must provide the following:
* Last two years’ tax returns and W-2s
* Thirty days of pay stubs
* sixty days of bank account statements
* signed authorization to order your credit report

In order for your loan representative to submit your application for pre-approval, you must provide the following:
* Last two years’ tax returns and W-2s
* Thirty days of pay stubs
* sixty days of bank account statements
* signed authorization to order your credit report

Question 7

House Hunting Process

Answer 7

• Determine what you can afford
• Get the pre-qualified and pre-approval process complete
• Decide on what type of home you want
• Work with an agent and start researching homes
• Put in an offer for the home

Question 8

Loan Application (1003)

Answer 8

• The most important form in the mortgage
  lending business is the Uniform
  Residential Loan Application (which is Freddie
  Mac Form 65 and Fannie Mae Form 1003)
• It is often referred to as a “1003”

Question 9

The _______ is a term used by lenders to express the ratio of a loan to the value of a property that is purchased.
A: Lender To Value Ratio (LTV)
B: Loan To Value Ratio (LTV)
C: Term To Loan Value (TLV)
D: None Of The Above

Answer 9

B: Loan To Value Ratio (LTV)

Question 10

Term & Loan

Answer 10

• A term loan is a monetary loan that is repaid in regular payments over a set period of time.
• Term loans usually last between one and ten years, but may last as long as 30 years in some cases.
• Repayment Period

Question 11

Interest Rate

Answer 11

• This is how much you pay on top of the principle for the length of period of time.
• It is amortized over the length of the loan

Question 12

Credit Report

Answer 12

• A credit history is a record of a borrower’s responsible repayment of debts.
• A credit report is a record of the borrower’s credit history from a number of various sources such as banks, credit
  card companies, and governments.
• “Snap shot of the whole history of the barrower”

Question 13

Different Types of Credit Bureaus

Answer 13

1) Transunion
2) Equifax
3) Experian

Question 14

Income

Answer 14

• Income is money that is received from work (wage or salary), capital (profit/interest) or land (renting a property)
• There are many sources of income
• When going through the loan application, the underwriter will evaluate the type of income (hourly, salaried, commission, or self-employed), history of income. They
  want to see stability with your income

Question 15

Assets

Answer 15

• Useful or valuable objects
• Property owned by a person or company
• Military equipment, planes, shops, estates, * There are different types forms of assets: cash, prepaid expenses, inventory, various belongings, and properties

Question 16

Debt to Income Ratio

Answer 16

To determine your Debt to Income ratio (DTI), it’s a simple
step:
* Take your total debt figure and divide it by your income * 5000 month a salary- and your debits are $2500 (rent payment, car loan, student loans, credit card payments)
* In this case your DTI is 50%

Question 17

Appraised Value of Property

Answer 17

• It is an evaluation of a property’s value based on a given point in time.
• The evaluation is performed by a professional appraiser
• This takes place during the mortgage origination process.
• The appraiser is usually selected by the lender
• The fees for the appraiser is paid for by the borrower

Question 18

Loan to value ratio

Answer 18

• Every loan program has different requirements
• The loan-to-value (LTV) ratio is a financial term used by lenders to express the ratio of a loan to the value of an asset purchased.
• The term is commonly used by banks to represent the ratio of the first mortgage line as a percentage of the total appraised value of real property

Question 19

The _____ determines whether applicants are able and likely to repay a debt. They evaluate the loan application and ensures all requirements are fulfilled.
A: Credit Analyst
B: Underwriter
C: Listing Agent
D: None Of The Above

Answer 19

B: Underwriter

Question 20

Underwriter

Answer 20

What is an underwriter?
* Underwriter is an imperative person in the transaction
* Loan officer, Processor and underwriter are the three individuals who review the loan
* The underwriter is there to protect the interest of the lender and to ensure that all documentation is compiled correctly and that all documents follow the guidelines (criteria)

Question 21

Fannie Mae (FNMA)

Answer 21

What is their role?
* Fannie Mae is created a liquid secondary mortgage market and thereby made it possible for banks and other loan originators to issue more housing loans, primarily by buying Federal Housing Administration (FHA) insured mortgages

Question 22

Desktop Underwriter

Answer 22

Automated underwriting system

Question 23

Freddie Mac

Answer 23

• They make the rules of conventional lending

Question 24

Lets review the loan officer’s role

Answer 24

• Remember to tell you client, that the loan officer is their friend
• Always complete the application process in a timely fashion and provide all the required documentations
• Always get the pre-approval process done prior to house hunting

Question 25

Why is a pre-approval so valuable? A: Lender Has Checked Your Credit And Verified Your Documentation To Approve The Loan Amount B: Lender Has ONLY Checked Your Credit C: Lender Has Checked Your Spending History D: None Of The Above

Answer 25

A: Lender Has Checked Your Credit And Verified Your Documentation To Approve The Loan Amount

Question 26

What is the pre-approved process? Lets Review!

Answer 26

* Its always smart to get your pre-approval process before you start house shopping * Meet with a loan officer and start the application process * Complete the online application * For Mortgages: you need to have a two year salary history, two year address history, and good credit

Question 27

Pre-Approval Process

Answer 27

* Always provide supporting documentation * The loan officer will look for your gross monthly income * Discuss the loan terms and loan programs with the loan officer

Question 28

What is mortgage insurance?

Answer 28

The mortgage insurance will cover the lender Essentially if you default on your payment, the lender forecloses on the property, the mortgage insurance will cover the lender for any loss they may encounter Always encourage your clients to seek professional advice in regards to what they need (mortgages, taxes, etc.)

Question 29

Lets review the loan officer's role

Answer 29

* Remember to tell you client, that the loan officer is their friend * Always complete the application process in a timely fashion and provide all the required documentations * Always get the pre-approval process done prior to house hunting

Question 30

Interest Rate

Answer 30

* This is how much you pay on top of the principle for the length of period of time. * It is amortized over the length of the loan

Question 31

The Automated underwriting program for Fannie Mae is called: A: Desktop Underwriter B: Ginnie Mae C: Loan Prospector D: LTV

Answer 31

A: Desktop Underwriter

Question 32

An impound account is an account where which of the following are collected? A: Mortgage Insurance And Property Taxes B: Property Taxes And Utilities C: Hazard Insurance And PMI D: Property Taxes And Hazard Insurance

Answer 32

D: Property Taxes And Hazard Insurance

Question 33

Mortgage insurance benefits the A: Buyer B: Seller C: Mortgage Lien Holder D: Title Insurance Company

Answer 33

C: Mortgage Lien Holder

Question 34

Mortgage insurance is usually required by the lender when the buyer has less than ____ equity in their property A: 10% B: 15% C: 20% D: 25%

Answer 34

C: 20%

Question 35

The "Front End Ratio" A: Compares The Proposed Housing Payment To The Borrower's Gross Income B: Compares The Proposed Housing Expense To The Borrower's Net Income C: Compares The Loan To Value Ratio And The Back End Ratio D: Compares The Equity To The PITI

Answer 35

A: Compares The Proposed Housing Payment To The Borrower's Gross Income

Question 36

The "Loan to Value Ratio" is calculated by A: Dividing The Loan Amount By The Value Of The Property B: Dividing The Value Of The Property By The Loan Amount C: Dividing The Front End Ratio By The Back End Ratio D: Dividing The Total Monthly Debt By The Proposed Housing Debt

Answer 36

A: Dividing The Loan Amount By The Value Of The Property

Question 37

The three credit bureaus are A: Equifax, Experian, Trans Union B: Equifax, Experian, Credit Sense C: Experian, Transunion, Credit Sense D: Equifax, Transunion, Credit Sense

Answer 37

A: Equifax, Experian, Trans Union

Question 38

A buyer should expect to provide which of the following documents when applying for a mortgage A: Tax Returns B: Bank Statements C: W-2s D: All Of The Above

Answer 38

D: All Of The Above

Question 39

Another name for a mortgage is a(n) A: Encumbrance B: Lien C: Pledge Of Real Estate As Security For Payment Of A Debt D: All Of The Above

Answer 39

D: All Of The Above

Question 40

The best time for a buyer to apply for a mortgage is: A: Before They Ever Go Looking At A Property B: After They Find The House They Want To Buy C: After They Are Under Contract For The Hours They Want To Buy D: Anytime Before Financing And Appraisal Deadline

Answer 40

A: Before They Ever Go Looking At A Property