Ground Up
What is the lender looking for when asking the borrower about "sunk" costs?
This is out of pocket money spent for the project that is not yet been reimbursed.
What documentation is NOT needed for a fix and flip loan?
1. Purchase contract of the property.
2. Renovation plans.
3. Architectural site plans.
4. Project timelines.
3. Architectural site plans.
This type of property, often generating rental income, is commonly evaluated using DSCR.
What is a multifamily property
Commercial
Single family non occupant
Mixed-use
What is a "Mortgage Burning Party"?
In the past, it was common for homeowners to celebrate paying off their mortgage by having a "mortgage burning party". They would ceremonially burn the mortgage document to signify their debt-free status.
What is a financial product (loan type) offered to businesses to cover short-term operational expenses or manage cash flow.
What is a Business LOC.
What is the Lender looking for when asking the Borrower about "liquidity"?
They are looking for available cash in all of their resources.
Name an upfront fee that can be associated with a fix and flip loan?
1. Origination fee
2. Appraisal fee
3. Inspection Fee
4. Closing costs
For a DSCR loan, this aspect of the property is more critical than the borrower's personal income.
What is the property’s income?
Mortgage practices vary widely around the world. For example....In Japan, there are mortgages with terms up to 100 years that can be passed on to descendants. True or false?
True
These loans have lower monthly payments for a set period (5-7 yrs), followed by a large lump-sum payment of the remaining balance at the end of the term.
What is a Balloon Mortgage
What is a typical loan term duration for a construction loan?
12-24 Months
What are the typical repayment terms for a fix and flip loan?
Repayment terms typically involve interest-only payments during the loan term, with principal balance due at the end of the term. The loan is usually repaid with the proceeds of the property sale.
A balloon payment is required on a DSCR loan?
False
"Reeling" was a discriminatory practice where banks would refuse mortgages to ppl in certain neighborhoods based on racial or ethnic composition.
False. It was called "Redlining". This practice was outlawed in the US by the Fair Housing Act of 1968.
This loan is a short-term loan used to finance the construction of a new building from the foundation to completion.
What is a ground up construction Loan.
How does the lender evaluate the feasibility of the construction project? (need one answer only)
Lenders evaluate feasibility based on:
1. The borrower's experience
2. The project's cost and timeline
3. The quality of the plans and contractors
4. Appraisal of the completed property's expected value
What is a common risk associated with fix and flip loans?
1. Underestimating renovation costs.
2. Overestimating the ARV.
3. Market shifts.
4. Construction delays.
5. Unexpected property issues.
Which of the following is important to an underwriter for a DSCR loan?
1. The borrower's income?
2. The borrower's debt?
3. The borrower's credit score?
4. The borrower's debt to income?
The borrowers credit score.
Green Mortgages: Some lenders offer "green mortgages" that provide better terms for homes with more green space (land) because it helps with the environment.
False. Green mortgages are provided for homes with energy-efficient features or for borrowers making eco-friendly upgrades.
These loans can finance various types of commercial properties.
What is a DSCR loan?
If you currently have a DSCR loan and you want to refinance it into another DSCR loan, how can you improve the ratio?
1. Raise rents.
2. Increase Down payments.
3. Lower Interest Rates.
How is the loan disbursed for a fix and flip project?
It is typically disbursed in two parts: an initial advance to purchase the property and subsequent draw payments to cover renovation costs as work progresses.
A property with $200,000 in NOI and $150,000 in debt service has this DSCR.
What is 1.33
Movies and Mortgages Trivia: What 1946 classic movie prominently features a savings and loan institution central to the storyline.
"It’s a Wonderful Life"
Ran by the main character, George Bailey. He runs the Bailey Brothers Building and Loan Association, a small, community-focused financial institution.
I want to buy an Auntie Anne’s stores in a mall, what loan should I Apply for?
Business Acquisition loan without real estate.