Rosa is purchasing a home in Houston for $275,000 using an FHA loan with a 3.5% down payment. The upfront mortgage insurance premium (UFMIP) is 1.75% of the base loan amount and is financed into the loan. What is the total initial loan amount secured by a Texas deed of trust?
Correct Answer
C) $270,019
Down payment = $275,000 × 3.5% = $9,625. Base loan = $275,000 − $9,625 = $265,375. UFMIP = $265,375 × 1.75% = $4,644.06. Total loan = $265,375 + $4,644 = $270,019. In Texas, this is secured by a deed of trust.
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A trustee sale is a type of foreclosure where a trustee, appointed under a deed of trust, sells the property at auction to satisfy the debt.
Usury is the practice of charging an interest rate that exceeds the maximum rate permitted by state law. Usury laws protect borrowers from excessive interest charges on loans.
A VA loan is a mortgage guaranteed by the Department of Veterans Affairs available to eligible veterans, active-duty service members, and surviving spouses. It offers no down payment and no private mortgage insurance requirements.
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