Chapter 11 - Mortgages Flashcards
first mortgage
superior in rights to any other
second mortgage
subordinate to a first - known as a junior mortgage
purchase money mortgage
seller financing — owner lends buyer money
blanket mortgage
** used by who?
mortgage covers two properties, one property can be paided off without entire balance becoming due
– used by developers
Installment land contract
AKA
Contract for Deed
seller finances property for buyer
vendee gets equitable title until total paid off
Open-end mortgage
Whats another name?
allows buyer to re-borrow up to certain limit
Home Equity Line of Credit
HELOC
participation mortgage
lender participates in the income. the income beyond the fixed return increases the lender’s profits
What document CONVEYS equitable title?
contract
Wraparound mortgage
THINK DEBT CONSOLIDATION
- combines two or more debts - treated as a single obligation
- combination of old money and new money for loan
- a second mortgage held by a lender who collects payments on it and the first mortgage from the borrower. The lender makes the payments to the original mortgage holder.
Growing equity mortgage
increases in monthly payments are applied to princiapl (equity builds faster)
Adjustable rate mortgage
loan rate fluctuates up or down based on index tied to economy
Shared Appreciation mortgage
lender and borrower share in appreciated value of property when sold
Benefits lender with equity build up
graduated payment mortgage
payments start low, raise over a couple years, level off for remaining term
reverse annuity mortgage
for retirees
home must be 100% paid off
lender sends owners payments from equity
once home is sold, lender is compensated
Construction loan
loan used to build
Money released as needed
short term loan
higher risk to lender
refinancing
getting new loan to pay off existing loan
package mortgage
*typically used for:
GRANDMA AND GRANDPA’S FARM
Package means: real and personal property are covered under loan
Clause is a ____ in a mortgage
paragraph (description)
Alienation Clause
AKA
No one else (alien) can assume the loan.
loan is DUE ON SALE
ALIENATION = DUE ON SALE CLAUSE
Acceleration Clause
allows lender to foreclose upon defeciency or default by buyer
FORECLOSURE CLAUSE
Escalator Clause
if buyer defaults on payment, lender can escalate the rate
Pre-payment penalty
penalty for paying principal balance before specific date
Defeasance Clause
(DEFEATED THE LENDERS CLAIM TO PROPERTY)
When loan is paid off and lien is released.
Kicks in the deed of reconveyance.
Lender records mortgage release or deed release
deed of reconveyance
deed given after you’ve defeated / paid payments in full
Subordination clause
sub means under
Allows a subsequent mortgage to take priority
Assignment
one lender transfer mortgage to another lender
