Finance
A West Virginia borrower with a VA loan who stops making payments. The VA's guarantee means:
AThe VA makes the missed payments on behalf of the veteran
BThe VA will pay the lender a portion of losses if foreclosure occurs✓ Correct
CThe veteran's personal assets are protected from the lender's claims
DThe lender cannot foreclose on a VA-guaranteed loan
Explanation
The VA guaranty means the VA will pay the lender a specified portion of the outstanding loan balance if the borrower defaults and the lender suffers a loss after foreclosure. It reduces the lender's risk, enabling favorable loan terms for veterans.
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Key Terms to Know
Pre-Approval
A lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
Promissory NoteA written promise to repay a loan under specified terms — the borrower's personal financial obligation in a real estate transaction.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Math Concepts
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