A buyer purchases a $600,000 home using a VA loan with no down payment. The applicable VA funding fee for a first-time user with no down payment is 2.30% of the base loan amount. If the buyer finances the funding fee into the loan, what is the total loan amount?
Correct Answer
C) $613,800
The base loan amount equals the full purchase price with no down payment: $600,000. The VA funding fee is calculated on the base loan amount: $600,000 × 2.30% = $13,800. When the buyer finances the funding fee, it is added to the base loan: $600,000 + $13,800 = $613,800. This is consistent with VA loan guidelines, which permit the funding fee to be rolled into the loan amount rather than paid at closing (38 C.F.R. §36.4312).
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Key Terms:
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Predatory lending refers to unfair, deceptive, or abusive lending practices that impose unjustified terms on borrowers, often targeting vulnerable populations. It includes practices like excessive fees, inflated appraisals, and unnecessary refinancing.
RESPA is a federal law that requires lenders to provide borrowers with information about settlement costs, prohibits kickbacks and referral fees, and limits escrow account deposits. It applies to federally related mortgage loans.
The secondary mortgage market is where existing mortgage loans are bought and sold between lenders, investors, and government-sponsored enterprises (GSEs) like Fannie Mae, Freddie Mac, and Ginnie Mae.
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