Chapter 9 Flashcards
What is a promissory note?
a written promise to pay the loan
What is a mortgage?
a written document that secures the promissory note by pledging the property as collateral for the loan
What is a mortgagor?
the borrower (buyer/tenant)
What is a mortgagee?
the lender
What is a Reverse mortgage?
a loan where the bank uses equity in a senior citizen’s home to pay him monthly payments. (1 resident has to be at least 62 years old)
Whats insurance?
requires the borrower to keep the property insured for the term of the loan
Amortization tables are what?
a quick and easy way to calculate a monthly mortgage payment
(it gives you principal & interest)
How many steps are there in the amortization table process?
3
Amortization Table Step 1
trace finger down to the left column to the current interest rate
What is a balloon payment?
to pay the entire balance of the loan as a FINAL payment.
found only in partially amortized and straight-term interest loans
What is a straight-term loan?
the borrower makes interest-only payments for a fixed period then repays the entire loan balance in a balloon payment at the end
Adjustable rate mortgage is what?
they begin with an interest rate that is lower than the fixed rate
What’s an Index?
what future adjustments will be based off of
Whats the ceiling?
the max the rate can go in the lifetime of the loan
What’s the cap?
the max the rate can go in any 1 adjustment period
