About This Chapter
Real Estate Financing - Chapter Summary
VA, FHA, fixed rate, balloon, conventional, 5/1 ARM. Confused yet? You won't be once you have completed this chapter on real estate financing. You'll explore financing options; learn the terminology, procedures and the paperwork involved; and meet Fannie Mae, Ginnie Mae, and Freddie Mac along the way (no, they are not the new neighbors!). Take a deep breath, get comfortable, and jump right in. Choose from topics including:
- The personnel involved in financing a real estate transaction
- Primary vs secondary mortgage markets
- Underwriting and escrow
- Financing options: FHA, VA, conventional, seller, and more
- Financing documents and the good faith estimate
- Ginnie Mae, Fannie Mae, and Freddie Mac
- Learning the terminology
- Regulations and acts governing real estate financing
- Common financing calculations
Be patient and take your time working through this chapter. There is a lot of material here to cover, but don't worry, our instructors will make it easy to understand, and the video lessons will help you remember all the details. And remember, each of the lessons is designed to stand alone, so you can start with any of the lessons and complete them in any order you like. Read the transcripts or watch the videos. Take notes, draw diagrams, make lists. Use the resources in the lessons in whatever way works best for you. And don't hesitate to ask questions. That's why the button is there! Keep track of your progress on your Dashboard, and don't forget about the short quiz found in each of the lessons. Use them to reinforce key concepts as you complete the lessons, or revisit them periodically to keep the content fresh in your mind as you work through the chapter.
1. Professionals Involved in Financing Real Estate Purchases
In this lesson we will identify the different professionals involved in real estate financing. We will define the role of mortgage originators, underwriters, appraisers, and title agents.
2. Primary vs. Secondary Mortgage Markets: Definition & Differences
Mortgage markets are not only important for borrowers and lenders, but they also play an important role in the world of investment. In this lesson, you'll learn about the primary and secondary mortgage markets in the United States.
3. Loan Underwriting: Definition, Process & Purpose
In this lesson we will look at the definition of loan underwriting. We will also explore how and why lenders use the process before extending credit to buyers in the form of a mortgage.
4. Conventional Financing: Definition & Requirements
In this lesson we will define and describe the general requirements of conventional financing. We will also explore the concepts and application of loan-to-value ratios as well as private mortgage insurance.
5. What is FHA Financing? - Definition & Requirements
Homebuyers short on cash with a few dings on their credit report may qualify for FHA financing. In this lesson, you'll learn about FHA financing and its requirements. You'll also have a chance to test your knowledge with a short quiz.
6. VA Financing: Eligibility & Requirements
The VA home loan is a financing option available to those who serve or have served in the United States Armed Forces. This lesson outlines who is eligible for a Department of Veterans Affairs mortgage and the VA's unique requirements.
7. What is an Escrow Account? - Definition & Rules
Escrow is used in real estate sales transactions and in the servicing of mortgage loans every day. In this lesson, you'll learn what escrow is, who's involved and how escrow accounts are used in real estate transactions.
8. Underwriting in Real Estate: Definition & Requirements
Underwriters examine and evaluate the risk of offering a mortgage applicant a loan before the lender approves funding. They base their decision on a comprehensive review of the borrower's finances and specific details of the mortgaged property.
9. The Role of Fannie Mae in Real Estate Financing
In this lesson, you will learn about the history and structure of Fannie Mae. We will also cover the role Fannie Mae plays in the field of real estate financing. A short quiz follows.
10. The Role of Freddie Mac in Real Estate Financing
One of the biggest players in the secondary mortgage market is Freddie Mac. In this lesson, you'll learn about the history of Freddie Mac and its role in the mortgage market. A short quiz follows the lesson.
11. The Role of Ginnie Mae in Real Estate Financing
This lesson covers the history, structure, and role in real estate financing of Ginnie Mae, or the Government National Mortgage Association. We will discuss how Ginnie Mae affects investors and homebuyers.
12. Financing Documents in a Real Estate Sale
A real estate sale involving financing typically contains at least three main documents; the loan agreement, a promissory note, and a mortgage instrument or deed of trust. In this lesson we will explain the details and purpose of each document.
13. What is a Good Faith Estimate? - Definition & Components
A Good Faith Estimate helps borrowers make informed decisions when applying for a mortgage loan. Learn the ins and outs of a Good Faith Estimate (GFE) and how it works to bring transparency to real estate transactions.
14. Seller Financing: Definition, Method & Effects
In this lesson we will define seller financing and how it works. We will also address some of advantages and disadvantages of this creative financing method.
15. Residential Real Estate Loans: Types & Features
Different types of residential real estate loans involve varying interest rates and repayment schedules. In this lesson, we will explore some common loans and their features. Take a quiz after the lesson to test your knowledge.
16. Terminology for Real Estate Finance Documents
Terminology related to financial documents in real estate can be intimidating. In this lesson, we will define some of the most common financial terms used in real estate and discuss how they impact the cost of borrowing.
17. RESPA & Regulation X: Definition & Overview
Home buyers and anyone seeking real estate financing for residential property are provided with a number of benefits under RESPA and Regulation X. In this lesson we will look at the required disclosures and consumer protections in these laws.
18. Truth in Lending Act & Regulation Z: Definition & Overview
How much does that home mortgage actually cost? Let's take a look at the highlights of the Truth in Lending Act and Regulation Z to see how lenders must inform borrowers about the total costs of borrowing money.
19. The Equal Credit Opportunity Act & Regulation B
Most people need access to credit in order to purchase real estate. In this lesson, you'll learn about the Equal Opportunity Act and Regulation B and how they help ensure that lenders don't unfairly deny credit.
20. The S.A.F.E. Mortgage Licensing Act & Regulation G
The housing crash of 2007 caused the government to enact new laws to stimulate the economy and protect consumers. Learn how the Secure and Fair Mortgage Enforcement Licensing (S.A.F.E.) Act was designed to make obtaining a mortgage more secure.
21. Lending Issues in the Real Estate Market
Since the 2007-2008 housing market collapse, two of the defining issues in real estate lending have been tightening up of lending standards and decreasing interest rates for mortgage loans. In this lesson, we will discuss these issues and how they affect the current housing market.
22. Financial Calculations Related to Lending
Loan shopping involves a number of financial calculations. In this lesson, we will look at some of the common formulas used when talking about qualifying for and paying down mortgages.
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Other chapters within the Real Estate Exam Prep course
- Forms of Property Ownership
- Encumbrances in Real Estate
- Land Use & Regulations
- Land Descriptions & Surveys
- Transfer of Real Property
- Fair Housing & Consumer Protection
- Contracts In Real Estate Transactions
- Role of Agencies in Real Estate
- Property Valuation & Appraisal
- Real Estate Investment & Analysis
- Disclosures of Property Conditions
- Real Estate Closing & Settlement Procedures
- Leases & Property Management
- Principles of Practicing Real Estate
- Real Estate Ethics & Professional Responsibility
- Real Estate Exam Prep Flashcards