Dealing with Lenders

Thank you, LayaS.

I see now these courses seem to be the rule lately. I wonder what's behind this. Something with legal force maybe?

I like that there's a test. The test is open book. Sample test:

=== Start Sample Test ===

All of these are essential for successful budgeting except:
a) adhering rigidly to your objectives and never making adjustments.

b) developing a good record-keeping system.

c) exercising willpower to prevent overspending.

d) setting realistic goals.

A successful budgeting plan will help:
a) financially protect families from unforeseen events such as unemployment, death, etc.

b) understand how and where money is being spent.

c) increase savings.

d) all of the above.

True or false: It's inevitable that budgeting will hinder enjoyment of life, forcing people to make financial sacrifices.
a) True

b) False

There are two types of credit: open-end credit and closed-end credit. The difference is:
a) open-end credit is not paid off yet.

b) closed-end credit is revolving credit.

c) open-end credit is ongoing with a limit on how much you may borrow (e.g., credit cards) and closed-end credit is a one-time, limited-basis loan (e.g., car loan).

d) all of the above.

Once the choices of properties are narrowed down, it's time to make the best choice. Which of the following can help make a sound, practical decision?
a) Property taxes.

b) School system.

c) Cost of utilities.

d) All of the above.

A typical example of a contingency that may appear on an Offer to Purchase is:
a) a requirement for an asbestos inspection or evidence that the property meets safety code requirements.

b) obtaining satisfactory well and septic tests.

c) a time frame within which a buyer must secure financing.

d) all of the above.

Which of the following is NOT true concerning a counteroffer proposal?
a) The seller may change some of the contingencies in the buyer's offer.

b) The buyer must agree with the seller's counteroffer.

c) The seller may choose to not include items such as appliances.

d) The seller may reject the counteroffer and sell to another buyer.

Which of the following would most likely influence the amount of the buyer's offer?
a) Number of other buyers.

b) Motivation of the seller.

c) Amount of necessary repairs.

d) All of the above.

If a borrower wants the security of a consistent monthly payment, which mortgage would be most suitable?
a) Fixed-rate.

b) Nonfixed-rate.

c) Interest-only.

d) None of the above.

True or false: The Annual Percentage Rate (APR) is typically higher than the interest rate because the APR includes points, interest and other finance charges.
a) True

b) False

True or false: The shorter a mortgage loan term, the lower the monthly payment.
a) True

b) False

True or false: Mortgage insurance can be cancelled.
a) True

b) False

A document that pledges your home as security for the loan is called the:
a) Closing Disclosure.

b) Mortgage.

c) Mortgage Note.

d) none of the above.

True or false: Buyers may need to bring their homeowner's insurance binder to issue a mortgage loan.
a) True

b) False

True or false: The closing officer's job is to ensure all necessary documents are signed and verified, and the money is properly distributed.
a) True

b) False

The following are typically involved at closing except:
a) appraiser.

b) closing officer.

c) buyer.

d) attorney.

Which is NOT true about homeowner's insurance?
a) It's required to get a mortgage loan.

b) It's good practice to periodically review coverage levels to ensure the home is adequately protected.

c) Lenders will always escrow money from a mortgage payment each month to set aside money for homeowner's insurance.

d) If a lender doesn't escrow money reserved for homeowner's insurance, a buyer will have to budget and save for it.

Eventually, most homeowners will need to employ:
a) an electrician.

b) a plumber.

c) a carpenter.

d) all of the above.

Some of the important maintenance checks you should periodically perform in your home include:
a) cleaning gutters, checking exposed wiring for wear or damage.

b) changing furnace filters, closing windows when it rains.

c) checking caulking for decay, checking foundation for cracks or crumbling.

d) all of the above.

True or false: Repairs that occur after signing the closing documents are the previous homeowners' responsibility.
a) True

b) False

=== End Sample Test ===

I took it closed book, without the course, as a senior citizen who has owned a few homes now. I missed four or so questions. (Really, an attorney is typically involved at closing? That's what the authors of the test claim. Maybe things have changed since my last transaction in 2019.) I still passed and have the certificate to prove it. The grading is too generous.

Still, for a person who is new to home buying and ownership, I can see how this course would be useful. The test of course teaches as much as it gages knowledge.

I did as well. I agree that the test was maybe too easy for us grizzled veterans, but for people who haven't had to deal with this before, I think it's valuable.

I also disagreed about some of the answers. I've bought three homes, refinanced twice, and there were no lawyers involved. However, all three were new construction purchased from the builder/developer using their standard contracts - I can see the value of involving a lawyer if you're buying a re-sale. Also thought some of the questions were a bit misleading - for example the one about mortgage insurance. Generally you have no choice since it's based on the ratio of loan amount/purchase price. But it's not a life sentence - once your equity in the home rises above 20% (last time I looked) you can re-finance and drop the insurance.

But overall, I'm happy to see efforts like this.

Tho' quite a ways off from the purpose of this forum, I'll add that some states seem to require attorneys. We had to use them in NY & in NC. don't recall about Fla. They aren't required in CA where folks called title officers or escrow officers handle closings.

I think like a sixth of each test should be HOA/COA questions.

I took a first time homebuyer's class and it remains one of the smartest things I've ever done. Ours didn't have an exam. (that may have changed) but in addition to required classes, we're were assigned a counselor and the first thing they did was to run your credit report to see if you were even ready to buy a house. If you weren't, they'd explain why, help you set up an action plan and then review it with you every few months to check your progress.

Your hubby may be a little peeved at the extra steps, but he may find himself thanking them down the road because you were able to go in with your eyes wide open on what HOA living means. This is one area I wished my program addressed in more detail, especially in reviewing an HOA's financial statements.

Just to clarify, this is our 6th home purchase and we are not new to the home buying process. We each had to take the course and test which both of us passed with 100%. To be sure, the home buying process is much more complex these days. The documentation we had to produce was way more than we ever had to provide with previous purchases. The most annoying and perhaps funniest part was when they asked us to explain why there was a monthly withdrawal from our checking account to ________ Rentals and to show that we paid September's mortgage payment. Even though one of the first questions on the application was do you currently rent or own.

I don't mean to sound ungrateful because we are benefitting from a lower interest rate than what is currently offered.

When I built my new house things changed. Also no longer could write a check at closing. All wire transfer only. Had to pre arrange that days ahead to make sure there by closing day. Otherwise would have effected closing.

Found building a home a different experience than buying an existing home. Was lucky enough to be able to live in my existing house while waiting the year for the house to finish. Strange to sign paperwork for a house no keys or foundation.

Also because the price of lumber shot up. There were legal clauses for some builders to pass on that expense onto the buyer at closing. One builder cancelled all their contracts and gave buyers 72 hours to cough up an additional 20K to hold onto the house. I missed that by 2 weeks. That builder got sued a bunch of times over it. The fine line made it legal what they did.

I am not per se anti-regulation. But I feel like things are getting out of control. It's not like all the regulation is going to stop the over-supply of money hungry, law school debt-ridden attorneys from filing suit.

My one experience with a purchase agreement where the buyer had been approved with a VA loan was awful. Two days before closing, the lender disqualified the buyer. They would not admit why. My realtor thought the stupid lender had not incorporated the $40 per month HOA assessment into its calculations to determine whether the buyer was qualified.

Thank you for sharing.