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Florida Real Estate > Chapter 16: Types and Sources of Mortgage Money > Flashcards

Chapter 16: Types and Sources of Mortgage Money Flashcards

1
Q

Adjustable Rate Mortgage (ARM)

A

A mortgage loan with a calculated interest rate that may increase or decrease during the term of the loan

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2
Q

Amortized Mortgage

A

A mortgage loan that is fully repaid according to a periodic and consistent schedule that includes both principal and interest

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3
Q

Balloon Payment

A

A final installment payment on a note that is much larger than the previous monthly payments on the note

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4
Q

Biweekly Mortgage

A

Mortgage payments that are made every other week (26 payments a year)

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5
Q

Blanket Mortgage

A

A mortgage that is secured by two or more items of real property

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6
Q

Conforming Loan

A

A loan that meets FNMA and FHLMC borrowing requirements

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7
Q

Disintermediation

A

When depositors withdraw money from savings for direct investment with a borrower

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8
Q

Home Equity Loan

A

A mortgage secured by a personal residence up to the value of the mortgagor’s equity

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9
Q

Index

A

Financial indicator that will be the basis for an adjustable rate mortgage interest fluctuations

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10
Q

Intermediation

A

The process of depositing funds in financial institutions that serve as “intermediaries” for flow of funds for investment and borrowing

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11
Q

Land Contract

A

An agreement in which the seller of real estate obligates itself to deliver a merchantable title to the buyer upon buyer’s performance of certain agreed conditions such as payment of a certain number of installment payments; Also known as a Contract for Deed.

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12
Q

Level Payment Plan

A

A method for amortizing a mortgage whereby the borrower pays the same amount each month

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13
Q

Lifetime Cap

A

Sets the upper and lower interest limits for an adjustable rate mortgage

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14
Q

Margin

A

The additional rate of interest charged over and above the index rate in an adjustable rate mortgage

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15
Q

MIP

A

Mortgage Insurance Premium; payment for mortgage insurance which protects the lender in the event of default

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16
Q

Negative Amortization

A

When the monthly payment is insufficient to pay the accumulated interest for that month, resulting in an increase in the amount of the principal

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17
Q

Nonconforming Loan

A

A loan that does not meet FNMA and FHLMC borrowing requirements

18
Q

Package Mortgage

A

A debt secured by pledge of both real property and personal property such as range, refrigerator or furniture

19
Q

Partially Amortized Mortgage

A

Mortgage loan repayment with equal monthly payments, but there is a large balloon payment due at the end of the term

20
Q

Periodic Cap

A

Limits the time period interval for ARM interest rate adjustments

21
Q

Private Mortgage Insurance (PMI)

A

Non-governmental mortgage insurance needed to insure the portion of the mortgage balance that exceeds an 80% loan to value ratio

22
Q

Purchase money mortgage

A

A mortgage given by the buyer as part or all of the purchase price consideration for real property

23
Q

Reverse annuity mortgage

A

A loan arrangement in which a lender makes payments to the borrower

24
Q

Teaser rate

A

Below-market introductory rate for an adjustable rate mortgage

25
Q

Term mortgage

A

A mortgage loan that provides for periodic payments of interest only, with a balloon payment at the end of the loan term

26
Q

UFMIP

A

Up Front Mortgage Insurance Premium; lump sum mortgage insurance premium paid at closing for FHA loans

27
Q

If the Federal Reserve System sells securities from its inventory, what will happen to interest rates and the supply of money in circulation?

A

Interest rates will rise and the supply of money in circulation will be reduced

28
Q

In a fully amortized mortgage, although the monthly payment stays the same, the portion of each monthly payment that is applied to reduce the principal debt:

A

Increases each month

29
Q

Michael earns $4,000 per month (gross) and has a car payment of $600. He is applying for mortgage that will have monthly PITI of $1,100. How much is his total obligations ratio?

A

PITI + Other obligations / MGI = 42.5%

30
Q

The Federal Truth in Lending Act is governed by Regulation:

A

Federal Reserve Regulation Z

31
Q

Which of the following secondary mortgage market agencies is a government agency?

A

Government National Mortgage Association

32
Q

What are the qualifying ratios for a conventional loan?

A

28% housing expense ratio

36% total obligations ratio

33
Q

Christina has entered into a mortgage for a condominium that she intends to rent on a weekly basis. The lender has accepted a mortgage that covers the condominium plus all its furnishings. Which type of mortgage has Christina entered into?

A

Package Mortgage

34
Q

A below-market interest rate offered on adjustable rate mortgages utilized to attract new borrowers is known as the:

A

Teaser rate

35
Q

The amount of a VA guarantee on a mortgage loan depends on

A

The amount of the loan

36
Q

The component of an adjustable rate mortgage that remains constant throughout the term of the loan is the:

A

Margin

37
Q

All of the following are sources of lendable funds for mortgages, except:

    A     Credit unions
B	Savings associations
C	Life insurance companies
D	Federal Reserve System
A

Federal Reserve System

38
Q

A person borrowing money directly from the owner of the funds is an example of:

A

Disintermediation

39
Q

What is the association known as “Fannie Mae”?

A

Federal National Mortgage Association

40
Q

Which type of mortgage requires an upfront mortgage insurance payment plus a monthly mortgage insurance payment?

A

FHA

Florida Real Estate (21 decks)

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