Financing, Valuation, and Appraisal
Loan mechanics
Candidates should be able to compute loan-to-value, down payment, and monthly PITI, and to explain amortization (early payments are interest-heavy). Conventional loans above 80% LTV usually carry borrower-paid private mortgage insurance, which the borrower may request be cancelled at 80% of original value based on the amortization schedule and which terminates automatically at 78%; FHA loans carry mortgage insurance premiums with different cancellation rules, and VA loans use a funding fee instead of PMI. Discount points are prepaid interest that buy a lower rate; origination fees pay the lender's costs. Connecticut Housing Finance Authority programs help eligible first-time and targeted buyers.
Disclosure timing
Under the TILA/RESPA integrated disclosures, the Loan Estimate is delivered within three business days of application, and the Closing Disclosure at least three business days before consummation, with limited changed-circumstance revisions. Referral fees and kickbacks among settlement service providers are prohibited.
Valuation and appraisal
The three approaches are sales comparison (the workhorse for residential resale), cost (new or uniquely improved property), and income (income property, using gross rent multipliers and capitalization rates). Appraisers determine highest and best use, define market value, and reconcile approaches into one opinion. Appraisers must be credentialed by the Connecticut Department of Consumer Protection and follow USPAP; a broker's price opinion is not an appraisal.
Traps
Mixing PMI with FHA mortgage insurance; using assessed value as market value; treating the contract price as automatically the appraised value; forgetting that an appraisal contingency protects the buyer when value falls short.
Rule of thumb: value by capitalization = net operating income ÷ cap rate. A $60,000 NOI at an 8% cap rate indicates $750,000.