Chapter 16 Flashcards
Define a vendor take back mortgage
A vendor take back mortgage is one in which the vendor acts as a lender to the purchaser. The financing provided on a vendor take back mortgage is usually offered at a rate below the current market rate.
In a mortgage loan, what portion constitutes a bonus?
The bonus is the portion of the face value of a mortgage loan which exceeds the funds actually received by the borrower and which is intended as additional compensation for the lender.
Define prepayment penalties
In a closed mortgage, a lender who allows the borrower to prepay part of the OSB will charge a prepayment penalty. The penalty will be greater of three months’ interest or the interest rate differential on the amount to be prepaid.
Describe the purpose of a portable mortgage.
This mortgage gives the borrower the flexibility to sell one home and purchase another before the mortgage matures. The borrower may transfer the terms, conditions and interest rate from one home to another.
A closed mortgage is a mortgage which ___ be fully paid out before ___ of its term
cannot
expiry
In BC, mortgage lenders and brokers must satisfy the requirements of the __ __ ___ __ __ __ by disclosing to the borrower the __ __ __.
Business Practices and Consumer Protection Act (BPCPA)
Annual Percentage Rate (APR)
TF? Mortgage assumption is more common during times of rising interest rates be cause established low rates are attractive.
T
Define the cost of funds advanced to the borrower.
The rate of interest charged on the mortgage loan amount after all fees and bonuses are deducted.
Where an offer to purchase involves financing below the market rate of interest, the market value of the offer will be worth ___ than the stated offer price.
Less
