19_20 Purchasing and Selling a Home Flashcards
What is the back-end ratio?
A ratio comparing the total of all monthly PITI expenditures plus auto loans and other debts with gross monthly income.
What are closing costs?
Costs such as fees and charges above and beyond the down payment, typically varying from 2 to 7 percent of the mortgage loan amount.
Define down payment.
An initial payment made in the context of buying expensive items on credit, such as a vehicle or home.
What does the Federal Housing Administration (FHA) do?
Insures loans that meet its standards to encourage home ownership.
What is foreclosure?
Process in which the lender sues the borrower to prove default and asks the court to order the sale of the property to pay the debt.
Define front-end ratio.
A ratio comparing the total annual PITI expenditures for housing with the loan applicant’s gross annual income to assess the borrower’s ability to pay the mortgage.
What is a mortgage loan?
Loan to purchase real estate in which the property itself serves as collateral.
What is a point/interest point?
A fee equal to one percent of the total mortgage loan amount.
What is private mortgage insurance (PMI)?
Mortgage insurance obtained from a private company.
What does title insurance protect?
Protects the lender’s interest if the title search is later found faulty.
What is a contingency clause?
A section of a home sales contract that explicitly states a condition or action that must be met for a real estate contract to become binding.
What is a defect disclosure form?
A state required form that discloses problems that could affect the property’s value or desirability.
What does FSBO stand for?
For Sale By Owner.
What is a listing agreement?
Agreement that brokers require homeowners to sign that permits the broker to list the property exclusively or with a multiple-listing service.
Closing costs typically vary from ____ percent of the mortgage loan amount.
2 to 7 percent.
True or False: The front-end ratio assesses a borrower’s ability to pay the mortgage based on their gross annual income.
True.
