Real Estate

True or False

1. When a borrower makes a downpayment of less than 20% of the purchase price, the lender will usually require private mortgage insurance. 2. A nonconforming loan is one that meets Freddie Macs underwriting standards but falls short of the standards set by Fannie Mae. 3. FHA and VA loans are considered conventional loans. 4. A 95% loan is more likely to be an adjustable-rate loan than an 80% loan is. 5. A borrower who obtains a loan requiring private mortgage insurance is required to pay the monthly PMI premiums for the life of the loan. 6. With each payment made on a fully amortized loan, the amount of the debt is reduced and the interest due with the next payment is recalculated based on the lower balance. 7. The higher the loan-to-value ratio, the lower the lenders risk. 8. Lenders frequently offer lower interest rates on 15-year loans (as compared to 30-year loans), because the shorter term means less risk for the lender. 9. When a property appreciates in value because of inflation, this primarily benefits the trustor. 10. A property sells for $380,000, but the appraisal comes in at $360,000. The lender sets a maximum LTV of 80%, so the maximum loan amount will be $304,000.