Ch. 15 - Real Estate Finance Flashcards
This clause states that if the borrower repays the debt when due, the words of grant are void, the mortgage is canceled and the title is given back to the borrower.
Defeasance clause
The \_\_\_\_\_\_ clause outlines what will happen if the borrower fails to pay the mortgage, maintain the property, or perform any other agreement, stipulation or condition contained in the mortgage.
acceleration clause
This is a form of acceleration clause
that requires the borrower to pay off
the entire mortgage debt when the
property is sold.
Due-On-Sale Clause
The capital amount
borrowed, on which interest
payments are calculated
Principle of the Original loan
Typically 1 percent of the loan
amount, although it could be
higher. It covers the lender’s
cost for generating the loan.
Loan origination fee
_____ represent prepaid interest, and the
lender charges them to get additional
income on the loan. _______ are paid at
closing and are equal to 1 p
points
A document that describes the amount of money
borrowed, the terms under which it will be repaid,
and any conditions that relate to either the
borrowing of the money or the consequences in
event of default. This document establishes legal
evidence of the debt incurred.
Promissory Note
When a person is not liable for payment of the mortgage and the seller is still responsible for making the mortgage payments, it is known as \_\_\_\_\_\_
Taking title to a property
“subject to” the mortgage
With a \_\_\_\_\_\_\_, the monthly payments are allocated only to interest. No principal is paid off. At the end of the term, the borrower must be able to pay off the entire principal amount.
straight or term mortgage
Straight Loan
In an \_\_\_\_\_\_ plan, a borrower makes a periodic (usually monthly) payment of principal plus interest. These payments result in the loan being paid off gradually over time.
amortization plan
In a ______ loan, the
borrower has the same
payment amount every
month.
fully amortized
A _______ mortgage is a loan that has one large
final payment due when the loan matures.
Payment loans are partially amortized
loans. This means that the monthly payments
are not large enough to fully amortize the loan by
the end of the term, leaving
Balloon
The following are examples of... The Federal Housing Administration (FHA) The Department of Veterans Affairs (DVA) - sometimes simply referred to as VA Rural Housing Service (RHS) State of New York Mortgage Association (SONYMA)
Government-backed loans
mortgages
The _______ ________ is the most common
type of loan and is generally viewed as the most
secure. Most ________ ________ require the
borrower to make a down payment of 20% or
more, making the loan 80% or less of the
property’s sale price.**Typically uninsured
conventional mortgage
This is a popular way to
avoid having to pay private
mortgage insurance
80-10-10 financing
The interest owed and not
paid in the initial months is
added back to the principal
negative amortization
A \_\_\_\_\_ \_\_\_\_\_\_ mortgage (PAM) is a type of graduated payment mortgage under which the owner/borrower contributes a sum of money into an account that is pledged to the lender.
pledged account
A \_\_\_\_\_\_ is a variation of a Pledge Account Mortgage (PAM). In a \_\_\_\_\_\_\_, the lump sum payment that is made to the lender at closing usually comes from a builder as an incentive to the buyer or from a family member trying to help out.
buydown
An ______ loan is an
expandable loan which gives a
borrower a limit up to which he
or she may borrow.
open-end
A \_\_\_\_\_ \_\_\_\_\_\_ loan covers more than one piece of property. Land developers commonly use this type of loan when they buy a plot of land and divide it into many separate lots.
Blanket mortgage
A blanket loan usually includes a \_\_\_\_\_ \_\_\_\_\_ clause. This clause allows the borrower to obtain a release of any individual lot from the lien by repaying a certain part of the loan.
partial release
A \_\_\_\_\_\_ mortgage allows a borrower who has an existing loan to get another loan from a second lender without paying off the first loan.
wraparound
Interest rates on
construction loans are
usually _______ than on
other loans
“higher” than on other loans
because the risk is greater.
The following are examples of ways a \_\_\_\_\_ \_\_\_\_\_\_ loan may be used: Purchasing high dollar items. Taking a vacation. Consolidating other loans or credit card debt. Paying medical expenses. Paying college tuition. Making home improvements
home equity loan
The \_\_\_ provides low-down-payments mortgage loans to qualified buyers. ***The \_\_\_ does not build homes or loan money directly. They insure loans made by approved lending institutions
FHA
The following items are
important to know about
FHA loans.
FHA loans can be either fixed-rate 10-to-30-year loans or
one-year-adjustable loans. The maximum loan term is 30 years or 75 percent
of the remaining economic life of the property, whichever is less.
Down payments are low. However, the borrower must have cash for a down
payment and closing costs. These items cannot be added to the sales price
and become part of the loan repayment.
The maximum loan fee is 1 percent of the loan amount and is typically paid
by the buyer.
_______ provides low interest rate
mortgages to low-and-moderateincome families in the State of New
York.
SONYMA (State of New
York Mortgage Association)
A \_\_\_\_\_\_\_ shows the value of a property in relation to its sales price. It is issued by an approved VA appraiser when a veteran is seeking a DVA loan.
A Certificate of Reasonable
Value (CRV)
