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What is a it called when you take out a loan in where property or real estate is used as collateral.
A mortgage!
What does APR stand for?
Annual percentage rate
Where would you access Tools and Recourses for home lending?
TD.com, RetailOne, Home Lending Hub, ect.
________ is the measurement of the full cost of a loan including interest and loan fees expressed as a yearly percentage rate.
APR (annual % rate)
What is rate/term refinancing (Limited Cash-Out Refinancing)
*Double Points*: What would someone do this?
The borrower pays off the balance of the existing loan with a new loan
Why: to get a lower monthly payment, better interest rate, shorter/longer term to pay back the loan (this may also be accomplished with a home equity loan)
What is Home equity?
The value of a homeowners interest in their home (current market value of a home minus an liens on the property)
What is a fixed rate loan?
an interest rate and monthly principal and interest (P&I) payments that REMAIN THE SAME during the life of the loan.
Where would you find information about possible loan financing and options?
TD.COM OR RETAIL ONE
What is the difference between a Home Equity Line of Credit and a Home Equity Loan?
Line of Credit: a flexible line of credit that a borrower can draw funds from as needed, up to the credit limit - only paying back what is used
Home Equity Loan: Fixed payments that lets a borrower have the funds needed all at once for a specific period of time.
What is principal and interest? (in terms of lending)
Principal: amount of money owed
Interest: the cost for borrowing money, usually expressed as a rate.
What is collateral?
Something of value that a borrower offers as a way for a lender to secure a loan. (the collateral can be seized to recoup the losses if the borrower stops making promised payments)
Bob & Bob are planning a wedding and need $$$$$. They are going to use their house as collateral. In addition, they would like to pay off their existing mortgage (which has a higher rate) AND borrow the additional funds needed for the wedding. What type of home refinancing solutions would be best for them?
Cash out refinancing or a home equity loan
DEB just got off the phone with her real estate agent... HER OFFER ON HER DREAM HOME WAS ACCEPTED! She wants to see what her options are for loans through TD.
Where should she go to find more information on TD bank loan options?
td.com, home lending
Customers with ARMs are protected from extreme rate increases by rate change caps that limit how much the interest rate can change at any given time...
What are the three rate change caps for these loans?
Rate Caps: Initial/Periodic/Lifetime
EXAMPLE: Rate Caps 2/2/5
What is an adjustable or variable rate?
2x points: What is a mortgage with an adjustable rate?
Interest rate that is adjusted up or down based on a pre-selected index
2x: ARM, adjustable rate mortgage, variable rate mortgage
What does HELOC stand for?
Home Equity Line of Credit
What is cash-out refinancing?
Double Points: How can these funds be used?
TRIPLE POINTS: Is there another service we offer that could accomplish the same goal?
Transactions in which the borrower pays off the balance of their existing home loan and borrows additional funds against the value of the collateral property
2x points: Funds can be used... pretty much anyway the borrower wants (debt consolidation, home improvement, edu expenses, family expenses, ect.)
3x points: Home Equity Loan or Line (depending)
What is the difference between a primary residence, a second home, and an investment property?
Primary: Home used as a legal and principal place of residence for income tax purposes
Second Home: a home used occasionally or seasonally for recreational purposes
Investment: Not occupied by the owner and intended to be rented by others for income
What ID do you need to have in order to be a loan closer?
NMLS ID
What is an Amortization Schedule?
The schedule of monthly and principal interest payments over the life of the loan that is called amortization
What is the difference between primary residence, investment property, and a second home?
DOUBLE POINTS: If I own a duplex, and live in one unit, what type of property would it be?
Primary: Place they live for at least half the year (or 182 days)
Investment: Do not live, intention of renting out and making $
Second: Usually recreational, but there less than 1/2 the year
Duplex: PRIMARY! :o
What is a debt-to-income ratio? How could that ratio impact your lending options?
a ratio used by lenders to calculate the current and potential percentage of debt obligation a borrower has and could incur.
High debt to income ratio makes it LESS likely do get more financing
How are Adjustable Rate Mortgages calculated?
2x points: What is the index that td bank uses for most ARM products?
ARM rates are calculated using an index + a margin
2x: the index is a 30 day average of the secured Overnight Financing Rate (SOFR)
What is the difference between a secured loan and an unsecured loan?
Secured Loan: borrower provides collateral
Unsecured: does not require collateral
What is closed end credit?
2x points: For every example you can give
a type of loan that requires the borrower to repay the full amount, plus interest and fees, by a specific date
2x points: student loan, car loan, mortgage, ect.