Finance One is a 30-hour course that meets the elective prelicense requirement or SAE requirement by the Texas Real Estate Commission (TREC) for anyone who wishes to become or maintain a license in Texas. This course provides an introduction to residential real estate finance information on how to underwrite FHA, VA, FNMA, & FHLMC loans. In this course, the basics are discussed regarding applications, appraisals, escrow, title, and credit reports, which includes FICO, qualifying for loan amounts, and verifying income and assets.

You will also learn how to calculate loan amounts, affordable monthly payments, property taxes, hazard and mortgage insurances (Conventional and FHA), qualifying ratios and income.

Learning Objectives

• Identify and discuss the Federal and State laws affecting real estate.
• Describe mortgage loan programs and the mortgage markets
• Calculate loan amounts, affordable monthly payments, property taxes, hazard and mortgage insurances (conventional and FHA), qualifying ratios and income
• Explain theoretical aspects of financing including sources of money for mortgages, various types of mortgages based on payment structure and financial agreement, and the different kinds of loans available in the market
• Utilize the basics applications of escrow, title, private mortgage insurance and credit reports
• Verify the required documentation in the mortgage lending practice

Topics Covered

Lesson 1: Real Estate Math for Finance

• Numbers
• Arithmetical Operations
• Solving Equations
• Sums
• Activity: Think of a Number

Lesson 2: The Effect of the Market and the Government on Real Estate

• Supply and Demand inflation
• The Federal Reserve
• Taxes
• The Department of Housing and Urban Development
• Real Estate Investment Trusts
• Activity: Critical Thinking
• Case Study

Lesson 3: Introduction to Real Estate Finance

• Mortgages Amortization
• Discount Points
• Lien Theory and Title Theory
• Assumptions
• Activity: Crossword Puzzle
• Case Study: Monthly Payment

Lesson 4: Financial Qualifications

• Income
• Credit
• Source of Funds
• Debt
• Net Worth
• Activity: Matching
• Case Study: Borrower Qualification

Lesson 5: Property Valuation

• Eight Steps of the Appraisal Process
• Appraisal Methods
• Cap Rate Analysis
• Pro Forma
• Discounted Cash Flow Analysis
• Taxes and Depreciation
• Activity: Critical Thinking
• Case Study: Net Present Value

Lesson 6: The Financing Process

• Mortgage Brokers Loan Officers
• Application
• Title
• Survey
• Earnest Money Contract
• Deed
• Closing
• Activity: Fill in the Blank
• Case Study: Caveat Emptor

Lesson 7: Closing

• Legal Requirements Required Documents
• Prorations
• Closing Costs
• Activity: Closing
• Case Study: Proration

Lesson 8: Foreclosure

• Default
• Foreclosure
• Properties in Distress
• Activity: Matching
• Case Study: Forbearance

Lesson 9: Conventional Loans

• Conforming Loan Limits
• Private Mortgage Insurance
• Fannie Mae Underwriting Guidelines
• Freddie Mac Underwriting Guidelines
• Activity: Underwriting
• Case Study: Conventional Loan

Lesson 10: Variations

• Adjustable Rate Mortgage
• 80-10-10 Piggie Back Loans
• Graduated Payment Mortgages
• Growth Equity Mortgages
• Balloon Mortgages
• Wraparound Mortgages
• Reverse Annuity Mortgages
• Blanket Mortgages
• Open End Mortgages
• Sale-Leaseback Mortgage
• Permanent Buydowns
• Temporary Buydowns
• Activity: Crossword Puzzle
• Case Study: Adjustable Rate Mortgage

Lesson 11: FHA Loans

• Qualifications
• FHA Programs
• Mortgage Insurance Premium
• FHA Underwriting Requirements
• Activity: The Percentage is Right
• Case Study: FHA Loan vs. Conventional Loan with PMI

Lesson 12: VA Loans

• Underwriting Requirements
• Eligibility
• Entitlement
• Documentation
• Activity: Matching
• Case Study: VA Loan

Lesson 13: 1031 Exchanges

• Like Kind Property Capital Gains
• Simultaneous Exchanges
• Delayed Exchanges
• Qualified Intermediaries
• Three-Party Trades
• Reverse Exchanges
• Installment Sales
• Activity: Exchanging Numbers
• Case Study: Delayed Exchange

Lesson 14: Real World Practice

• Activity
• Critical Thinking Questions
• Case Studies