Chris Catanese

TAKE THE TEST!!!

TOMAR LA PRUEBA!!! ( en espagnol)

SEE HOW SHARP YOUR

REAL ESTATE AND MORTGAGE

SKILLS ARE!!

First Time Buying 101 Final Exam

Copyright 2007,2008 Chris Catanese All rights reserved.

HIGH SCORE AS OF 3/22/2008 = 30 out of 34

CAN YOU TOP THE HIGH SCORE AND GET A FREE COPY OF THE ULTIMATE FIRST TIME BUYING GUIDE???

After reading the below questions pick correct answer. There is only one best answer per question

Good Luck!!

1 When you are buying your first house..... What percentage of your gross monthly income is universally accepted as the maximum percentage that you can spend on both your housing payment and your existing or current debt service??

A 33% B 50% C 40% D 60%

2 Anybody who is a citizen of the United States of America is eligible for which of the following first time buying programs??

A VA ( Veteran's Administration )

B Allegheny County First Time Buying Program

C FHA ( Federal Housing Administration )

D Sallie Mae First Time Assistance Program

3 True or False?

At some point in the life of your loan's escrow account there will be an overage or a shortage??

4 What is the maximum amount of gift money that a first time buyer may accept from a family member tax-free??

A $12,000

B $10,000

C $22,000

D $20,000

5 What is the maximum amount of a gift that a first time buyer can get from a family member??

A $12,000

B $22,000

C Unlimited

D $33,000 per parent

6 True or False?

There are many programs available to first time buyers that allow a parent or family member to cosign for the loan.

7 What do the letters P.M. I. stand for??

A Private Mortgage Insignia

B Public Mortgage Insurance

C Private Mortgage Insurance

D Predatory Mortgage Insurance

8 True or False??

Your mortgage broker/banker should attend your settlement??

9 What is the biggest reason that PMI is great for first time buyers??

A PMI allows them to fly first class at the coach class price

B PMI gets them a free membership to the local YMCA for 1 year.

C PMI allows first time buyers to be able to put down less than 20% down

payment and still get approved for their first mortgage.

D PMI insures them against fire and theft in their new home.

10 True or False?

There are some great programs available to non-citizens to buy their first house in the United States of America??

11 True or False?

It's easy to get approved for a mortgage after declaring bankruptcy??

12 What amount of money does the average taxpayer/homeowner get back in cash from Uncle Sam for owning a home, and paying mortgage interest??

A $10,000

B $ 6,667

C $ 5,000

D $ 3,333

13 True or False?

If you are expecting a significant tax refund from Uncle Sam, you can have less federal income tax taken out of your weekly paycheck to balance out this future windfall?

14 Who are the Big 3 when it comes to credit reporting in the United States or America??

A Equifacts, Xperion, and Transonion

B Westinghouse, Equifax, and Transunion

C Equifax, Millenium, and Transunion

D Transunion, Equifax, and Experian

15 What percentage of the real estate taxes and mortgage interest paid is tax deductible??

A 33% if you make less than $59,999 per year.

B 80% if you live in the lower 48 states and pay taxes.

C 100% if you know how to spell your last name correctly.

D 77% if you do not know how to spell your last name.

16 If you are applying for a full documentation loan... What are the documents that your mortgage lender will be looking for to get you a mortgage approval??

A A copy of birth certificate, 2 years W2's, 30 days of pay stubs,

and 60 days bank statements

B a copy of your current lease, W2's, 60 days of bank statements, and

A letter from your parents saying that you are a good credit risk

C 60 days bank statements, 30 days of pay stubs, and 2 years W2's

D 30 days of pay stubs, a copy of your birth certificate, and 60 days

bank statements.

17 True or False?

Typically a first time buyer benefits from using a "Piggyback Mortgage" as opposed to paying monthly PMI??

18 How do you determine debt to income ratio??

A The value of the house divided by the amount of the mortgage

B The amount owed on the mortgage divided by value of the house

C The amount of total monthly debt divided by the amount of gross

monthly income

D The amount of rental income plus monthly equity gain divided by

the amount of the mortgage amount originally borrowed

19 On a scale of 1 to 10, how important is it to have a working and up to date monthly budget??

1 2 3 4 5 6 7 8 9 10

20 What does the word amortize and amortization mean or refer to for a first time buyer?

A It refers to the process of slowly depreciating the value of one's

real estate property on one's income taxes.
B It refers to the way in which a fixed term loan pays off over time with

regularly scheduled payments. An amortization schedule will show all

the payments on a loan over certain number of years.
C Amortization is the process by which first time buyers can borrow more money from the equity of their new

house. Be sure to set this up at the settlement table.

D Amortization refers to the process of underwriting a new mortgage application.

21 If a first time buyer paid $5,000 in real estate taxes, and $15,000 in mortgage interest over a calendar year. What would their total tax deduction be for the following year in relation to the interest paid, and real estate taxes paid?

A $10,000

B $15,000

C $20,000

D None of the above

22 True or False?

The word opportunity cost plays a major role in every decision that first time buyers make?

23 Assuming a $20,000 tax deduction on a first time borrower that is in a 33% tax bracket. ($5,000 in real estate taxes and $15,000 in annual mortgage interest paid) How much additional monthly tax refund would this borrower get because they owned a house, and wrote off the mortgage interest and real estate taxes??

A $6,600

B $660
C $555
D $5550

24 How many years do you typically need to be in your job or field in order to qualify for a conventional mortgage??

A 1 year

B 2 years

C 1.5 years

D 3 years

25 How long will it take me to get pre-approved for a mortgage after I apply for the loan??

A About a week

B Immediately

C 5 days

D 2 weeks

26 What is the maximum credit score available through the current credit scoring model that Equifax, Experian, and Trans union use to score consumer credit??

A 990 points

B 850 points

C 843 points

D 999 points

27 What is the main reason that the seller of a property might want to assist the prospective buyer with a "Seller Assist"??

A The seller genuinely cares about the buyer's finances and wants to

help as much as possible.

B The seller wants to do anything he or she can do to make it easier to

sell their house.

C The buyer's real estate agent asked for the Seller Assist very nicely.

D The seller's horoscope told them to be flexible when it came to

working with potential buyers of their house.

28 In order to qualify for a conventional fixed rate mortgage most borrowers will have to have all of the following documentation.

A 2 years work history, A credit score of more than 600, 2 years of

on time rent history, and 6 months of reserves left over after

they leave the settlement table.

B A college degree, 2 years of on time rent history, and 2 months of

reserves left over after settlement.

C A GED, 2 year work history, 2 years of on time rent history, and

2 letters of reference from their employer and parents

D A 5 year work history, a 3.5 GPA from an Ivy League college, 2

years of on time rent history, and a reference letter from their

employer.

29 True or False?

The Federal Truth in Lending Statement is the best way to comparemortgage lenders when it comes down to interest rate and fees.

30 True or False?

A first time borrower is allowed to receive a gift for the entire down payment??

31 What is title insurance??

A Insurance that protects you against getting bad service from your

title company on settlement day.

B Insurance that protects you from signing incorrectly at the settlement

table.

C Insurance that protects you from any existing liens or encumbrances

on the property that you are buying. It makes sure that you owe

only what you have borrowed.

D Insurance that protects you in case your title insurance company is

closed on settlement day by a blizzard.

32 True or False?

First time borrowers must escrow their tax and insurance with their mortgage lender??

33 True or False

Private mortgage insurance protects first time buyers from being discriminated against by predatory lending institutions??

34 How AWESOME is Active Rain?

SO... How do you think you did on the test??

ANSWERS WILL APPEAR ON MY EARLY AM WEDNESDAY BLOG... (3/26/2008)

TOP 3 Test Takers will get 5 FREE COPIES of my Ultimate First Time Buying Guides to help educate their clients!!!

Everybody who Takes the Test will receive a Free Copy of my Buying and Closing Guide!!

HAPPY EASTER!!!!!!!!

FIND OUT HOW TO USE THE ULTIMATE FIRST TIME BUYING GUIDES IN YOUR BUSINESS TO GENERATE CLIENTS!!

With the Spring Buying Market heating up quite nicely in the Philadelphia, Pa area, I wanted to wish all of my Active Rain members and my clients and wish everyone a Happy Easter. Interest rates are at their lowest since January 22 and 23rd before the big Mortgage Backed Securities bounce that took us from 5.5% to 6.375% in just a couple of days.

Currently rates are in the 5.75% and 0 pt range for 30 year fixed, and in the 5.375% range with 0 pts for 15 year fixed rate mortgages. If your clients are paying higher rates and fees than these and you are in PA, NJ, DE, MD, or VA feel free to give me a buzz to talk turkey. My direct number is 215 870 3060.

Have a great Easter Weekend and I look forward to hearing from Active Rainers that want Free Golf Lessons in the Philadelphia area!!!

What are the chances that we would wake up today to hear that the Federal Reserve and JP Morgan Chase Bank needed to loan money to Bear Stearns to help them stay afloat.... I thought Bear Stearns had DEEP DEEP POCKETS.. I guess not that deep... HOLY COW!!!

On Wednesday, the CEO of Bear Stearns was on the early morning show Squawk Box on CNBC... The hosts asked pointed questions and repeatedly the CEO answered that they had a strong balance sheet, and that they were in good shape financially... 48 hours later Bear Stearns was using the emergency lifeline to call the Fed and set up company saving loan for billions....

After the announcement this morning, Jim Cramer also of CNBC said that it was possible that things in a business like Bear Stearns could change in a matter of hours or days, and that the CEO could have been telling the truth at the time of the interview...

This news of the Prop Up of Bear Stearns by the Fed and JP Morgan Chase caused stocks to lose favor quite rapidly... Down 300 pts at one point the stock market clawed back to only down 100 pts before George Bush spoke at the Economic Club of America....

At some point in his speech he noted that he was... " An optimistic type of fella" .... which made me think of the campaign slogan of Herbert Hoover in 1928.. "A chicken for every pot"...

The last time that I checked, the economy didn't get points or a boost from motivational speeches from politicians that are completely out of touch with the reality of the current situation. Clearly if Ben Bernanke and his team of Fed Governors don't know what is coming down the pike at us in economic terms.... How in the world can George Bush be so blindly optimistic.....

THE GOOD NEWS IS>>>>>>>>>>>>>>>> INTEREST RATES ARE HEADED DOWN!!!!

LET'S SELL SOME HOUSES!!!

I HOPE THIS INFORMATION CLEARS UP THE MURKY PICTURE OF WHEN ALL OF THIS STIMULUS WILL START TO 

TRICKLE DOWN TO THE LITTLE GUYS!!!     Basically late summer.....

AFTER A GREAT WEEKEND>>>>>>        I wonder what this week could bring.   Good things I am sure!!!!    

There has been talk this morning on Squawk Box about getting the Fed involved as a buyer of Mortgage Agency 

Products.....   Mortgage Backed Securites...

THIS WOULD BE GREAT AND BRING SOME CERTAINTY TO AN UNCERTAIN SITUATION!!!!     THE CONVENTIONAL MORTGAGE MARKET.

All the smart people on TV these days seem to realize at least one thing.....     If the average American has to make their way on

what they have right now as a mortgage...     It could be a tough road.      

A good percentage of America needs/wants to refinance into a lower FIXED interest rate and hunker down in the house that they like for the long haul..... or the short haul, whatever their 

choice might be.      Without a good bit of these wanne be refinancers getting their refinances accomplished....... the average american consumer's purse strings will continue to be constrained 

for months and years to come.    This means that whatever state the economy is in right now....   a pre Recession, or a Recession 

depending on who you talk to...    this state would be extended, and that we might be in this type of situation for a while.    

I VOTE FOR LOWER INTEREST RATES FOR THE REST OF 2008!!!!     NOW WHERE ARE THOSE SUPER DELEGATES AT WHEN I NEED THEM??

WHO'S WITH ME???

The bond market put up a mild rally yesterday after Fed Governor Kohn said his piece. The 10 year bond opened at 3.83% versus 3.92 on Monday morning. The big news today in that Bernanke will testify about monetary policy. This Fed seems more able and more comfortable to speak its mind. The latest telling stat about the looming recession is that 45% of Economists believe that a recession is imminent. The other 55% think that we will skirt a recession or avoid it entirely. Chances are that The Fed will continue it's easily policy in the coming months in an effort to turn the tide that is and remains a credit crunch on large sections of the consumer world. Job numbers are out later in the week and will be scrutinized closely to see which direction the employment market is really heading!!

If any ActiveRain member wants a copy of The Ultimate First Time Buying Guide, or The Ultimate First Time Closing and Settlement Table Guide just let me know. I can get a copy of it out in the mail to you. Both books are over 70 pages and contain some of the most important first time buying and closing information available.