Chapter 14: Financing I: Conventional, FHA and VA Loans Flashcards
a mortgage loan in which the interest rate may increase or decrease at specific intervals, following an economic indicator
adjustable-rate mortgage
states that a buyer getting an FHA loan can rescind the contract if the appraisal is lower than the purchase price
amendatory clause
written listing of each payment, broken down into interest, principal and remaining debt
amortization schedule
a loan in which the principal as well as the interest is payable in monthly or other periodic installments over the term of the loan, resulting in a zero balance due at the end of the term
amortized loan
of a mortgage, able to be transferred to another owner of the property
assumable
repayment plan in which half a monthly payment is made every two weeks, the equivalent of 13 full payments a year
biweekly mortgage
licensee’s written estimate of market value, used by lenders and mortgage companies where they believe the expense and delay of an appraisal is not needed
broker’s price opinion (BPO)
loan with monthly payments including property taxes and insurance
budget loan
payment of extra upfront points in return for lower interest rate
buydown
with an adjustable-rate mortgage, a limit, usually in percentage points, on how much the interest rate or payment might be raised in each adjustment period
cap
with an adjustable-rate mortgage, a limit, usually in percentage points, beyond which the interest rates or monthly payments on a loan may never rise. sometimes known as a lifetime cap.
ceiling
VA appraisal statement
Certificate of Reasonable Value (CRV)
the interest or value that an owner has in property over and above any mortgage indebtedness and other liens
equity
insures low down payment
Federal Housing Administration (FHA)
the most popular mortgage plan, with 3% or less as required down payment
FHA 203(b)
guide to national mortgage trends, used for adjustable mortgage rates
index
charge for the use of other people’s money
interest
ratio between property’s value and the amount lent on it
loan-to-value (LTV)
percentage charged by lender above index rate
margin
gradual building up of a large mortgage debt when payments are not sufficient to cover interest due and reduce the principal
negative amortization
lender of low-interest mortgage money in certain target areas
New Jersey Housing and Mortgage Finance Agency (NJHMFA)
principal, interest, taxes, and insurance: the components of a regular mortgage payment
PITI
a unit of measurement used for various loan charges; equals 1% of the amount of the loan
point
insurance that limits the lender’s potential loss in a mortgage default, issued by a private company rather than by the FHA
private mortgage insurance (PMI)
a guarantee by the lender to issue the loan at the quotes interest rate; under some conditions, the rate can still change
rate lock
interest-only mortgage
straight (term) loan
neighborhoods in which the state wishes to strengthen housing stock
target areas
a 28-page booklet issued by the consumer Financial Protection Bureau that discusses the process of obtaining the best mortgage, understanding closing costs, and ways to be a successful homeowner
Toolkit: A Step-by-Step Guide
a mortgage loan on approved property made to a qualified veteran by an authorized lender and guaranteed by the department of veteran affairs
VA (veterans affairs) mortgage
