Conforming loan limits vary based on two factors location and what else Quizlet

If the loan is $115,000 at 10% interest for 30 years and the payment is $1,009.21 per month (P &I), what is the principal balance after one payment?

If you remember the steps -Multiply - Divide - Subtract - Subtract, you will have no difficulty in amortizing a loan.

Determine the annual amount of interest paid, based on the loan balance.

$115,000 x 10% = $11,500 interest per year. Divide by 12 to get monthly interest $11,500 ÷ 12= $958.33 per month interest.

Subtract $958.33 from the total monthly payment of $1,009.21 = $50.88. This is the amount of the first monthly principal payment. This is the amount that will be subtracted from your outstanding mortgage balance.

What is the monthly balance after the second payment? To calculate the second month's interest payment, follow along:
- Subtract the first month's principal payment. $115,000 - $50.88 that leaves a loan balance at the beginning of the second month of $114,949.12.
- Take $114,949.12 x 10%=11,494.91. Divide by 12 to get monthly interest = $957.91
- Subtract $957.91 from the principal and interest payment of $1,009.21. The principal paid is $51.30
- Subtract $51.30 from the balance of $114,949.12=$114,897.82

means to "put to death", from the French word mort, meaning death. An amortized loan is one where regular monthly principal and interest are paid throughout the entire loan period.

For example, a loan of $350,000 is secured at 8% interest for 30 years. The monthly P & I payment would be $2,568.18 per month. This would mean that during the 360 months of the loan (30 years x 12 months per year), the payment would remain at $2,568.18 per month. This is also known as a Fully Amortized, Fixed Rate mortgage.

At the beginning of the loan, interest is the higher portion of the Principal and Interest payment. As each payment is made, the interest portion of each monthly payment decreases while the principal portion of the monthly payment increases. At the halfway point of the loan, principal and interest portions of the payment will be equal. On the back end of the loan, the principal payment is greater than the interest portion.

A fully amortized mortgage may be paid monthly or bi-weekly. Choosing to pay your mortgage bi-weekly, shortens the needed time to pay off a mortgage-i.e. a 30-year mortgage would be paid in 15 years.

The Department of Housing and Urban Development (HUD) oversees the FHA. If a buyer wants to obtain an FHA loan, a licensee should send them to a qualified lender, such as a savings & loan or a bank. The following are FHA's requirements:

FHA loans require a down payment - as low as 3.5%. This down payment may be a gift if needed by the buyer, but not a loan. Since these loans may be obtained for such a low down payment, the borrower is charged a one-time insurance premium at closing. This insurance provides security to the lender in addition to the real estate in case the borrower defaults. The one-time charge is paid at closing regardless of any down payment by the borrower or some other party (i.e. the seller) and may be rolled into the loan amount. This charge is called an Up Front Mortgage Insurance Premium (UFMIP). For loans made with a low down payment, the FHA also charges the borrower an insurance amount with each payment until the Loan to Value ratio falls below 78%. The monthly insurance is called MIP or MortgageInsurancePremium.

Lenders may charge points to increase their yield, i.e. their profit. The borrower, the seller, or both can pay these points. Each point is 1% of the loan amount. A discount point is technically pre-paid interest.
No prepayment penalties are allowed on FHA loans
Loans are assumable with certain qualifying conditions depending upon when the original loan was originated. Every mortgage application begins with an appraisal perform by an approved FHA appraiser.
FHA regulations set minimum standards for the type, the construction of buildings and the credit-worthiness of borrowers. FHA does NOT build homes nor does it lend money. The term "FHA Loan" refers to a loan that is insured by the Federal Housing Administration. FHA loan limits are based upon the area in which the property is located.

The ratios that FHA uses differ from that of conventional lenders. FHA uses a Housing Expense Ratio (HER) to determine if a buyer qualifies for the loan. To calculate the HER, Take the housing expenses (including insurance and taxes) and divide by the gross income. Note, the ratios, the rules and interest rates are continually subject to change. A real estate licensee is advised to check with local lenders regarding current ratios and the maximum loan amounts.

1. Savings and Loans - specialize in long-term residential loans. They are one of the largest lenders of residential funds. They may be either federally or state chartered. They are part of the Federal Home Loan Bank system. Deposits must be insured for at least $250,000.
2. Banks - They are active in home mortgage loans, FHA, and VA. Examples of short-term loans banks also lend are for: automobile, mobile home, and household loans.
3. Insurance Companies - prefer large commercial projects, but will make residential loans. They prefer to take a solid equity position. Banks often partner with developers. This type of lending is called:
a) Participation Financing - A mortgage in which the lender participates in the income of the mortgaged property beyond a fixed return, or receives a yield on the loan in addition to the straight interest rate.
4. Mortgage Loan Originators - The Dodd Frank Wall Street Mortgage and Consumer Protection Act created criteria for those who take or assist others completing applications and to negotiate the terms of mortgages. Mortgage Loan Originators who finance any federally related transactions must be registered with the Nationwide Mortgage Licensing System (NMLS). Those originators not required to be registered with the nationwide system must be licensed through the Florida Office of Financial Regulation.
a) Mortgage Brokers - A person, corporation, or firm not otherwise in banking or finance, which negotiates, sells, or arranges loans for compensation. They do not fund loans.
b) Mortgage Bankers provide their own funds for loans. Sometimes this person or entity services the loan as well.
5. Private Individuals - Any private individual, either investor or seller, who finances a property being sold, is limited in the number of transactions that may be financed without a registration as a mortgagor loan originator. The laws are complicated. However, if more than one property is financed in a two-year timeframe, a registration as a Mortgage Loan Originator may be required.
6. Local Governments for bond programs such as community improvement money.

Jerry is a buyer who wants to purchase a property and generate a profit. He offers to buy Ben's place that is valued at $115,000 and listed at that price. Jerry tells Ben's representative that he would like to purchase Ben's House for $145,000 ($115,000 for the price and $30,000 cash to fix it up. Jerry says he can provide an appraiser to create the price for the house and will set up the title company for the sale. He says this is a great deal for the sales associate, as she will get a bigger commission with the higher price.
The sales associate writes the contract for a sale at the price requested by the buyer, the buyer's appraiser appraises the property for the contracted amount, while the bank finances the loan. It ends up that the buyer, Jerry, has used someone else's identity and credit to secure the loan, he takes the difference between the sale price and the loan, then doesn't make any payments to the bank.

What is a conforming loan quizlet?

What two factors can a borrower consider in order to minimize the cost of credit?

What's another name for a nonconforming loan quizlet?

Which of the following is a qualifying ratio for a conventional loan quizlet?