Chapter 12 Key Terms

Question 1

Mortgage in which the interest rate changes periodically (i.e. annually); a way for banks to transfer the risk of higher interest rates to the consumer

Answer 1

adjustable rate mortgage (arm)

Question 2

the value of a piece of property over and above any mortgage or liabilities related to i

Answer 2

equity

Question 3

An interest rate that does not change over time

Answer 3

fixed rate

Question 4

An asset rising in value, which helps one to keep up with the rising cost of inflation; real estate can be a great inflation hedge

Answer 4

inflation hedge

Question 5

Computer program used by real estate agents to search frequently updated listings of available prop-erties in order to find prospective homes for their clients

Answer 5

multiple listing service (MLS)

Question 6

Loan secured by the collateral of real estate property, which obligates the borrower to make a predetermined series of payments

Answer 6

mortgages

Question 7

Original amount of money invested, excluding any interest or dividends; also called the face value of a loan

Answer 7

principal

Question 8

A real estate professional who receives a com-mission for arranging and facilitating the sale of a property for a buyer or a seller. Also referred to as a real estate broker

Answer 8

real estate agent