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 2.15% of the base loan amount. If the buyer finances the funding fee into the loan, what is the total loan amount?
Correct Answer
B) $612,900
With no down payment the base loan equals the full purchase price, $600,000. The funding fee is figured on that base loan: $600,000 x 2.15% = $12,900. Financing the fee adds it to the base loan, so the total loan amount is $612,900. The VA funding fee is authorized by 38 U.S.C. Section 3729, which lets the borrower roll the fee into the loan instead of paying it at closing; the current first-use purchase rate with no down payment is 2.15%, and a subsequent user with no down payment pays 3.3%.
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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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