Chapter 14: Financing; Conventional, FHA and VA loans. Key Terms Part 1

Question 1

Adjustable rate mortgage

Answer 1

A plan with interest rate changed either up or down periodically.

Question 2

Amendatory clause

Answer 2

This states that a buyer getting an FHA loan can resend the contract if the appraisal is lower than the purchase price.

Question 3

Amortization schedule

Answer 3

Listing of each payment: interest, principal paid, remaining debt.

Question 4

Amortized loan

Answer 4

The repayment plan including principal payments gradually; reduces debt.

Question 5

Assumable

Answer 5

This means a mortgage can be taken over by the next buyer.

Question 6

Biweekly mortgage

Answer 6

This is a repayment plan, equivalent of 13 monthly payments per year. It saves more on interest that I conventional 30 year mortgage.

Question 7

BPO

Answer 7

The written estimate of value by real estate license.

Question 8

loan-to-value ratio. LTV

Answer 8

The amount of a mortgage loan in relation to the value of a home.

Question 9

Budget loan

Answer 9

A loan with monthly payments including property taxes and insurance.

Question 10

Buy down

Answer 10

The payment of extra points in return for lower interest rate.

Question 11

Cap

Answer 11

A percentage beyond which interest rate cannot be raised at an adjustment. On a variable rate mortgage this is the Are the most that they can charge.

Question 12

Ceiling

Answer 12

The highest interest rate ever allowed on a specific adjustable loan.

Question 13

Certificate of reasonable value

Answer 13

The VA appraisal statement.

Question 14

Federal housing administration (FHA)

Answer 14

The US agency that insures mortgages to protect lending institutions.

Question 15

FHA 203(b)

Answer 15

This is known as a low down payment in shored mortgage loan.