CHAPTER FOUR OWNER FINANCING AND OTHER TYPES OF FINANCING

Question 1

One type of transaction that occurs in some areas more frequently than other is a ___ ___ mortgage, aka owner financing. You may encounter this type of loan when situations where the home buyer cannot qualify for a typical mortgage. The loan is issued to the home buyer by the seller.

• fewer closing costs

Answer 1

purchase money mortgage

Question 2

___ ____ ___ which is often called a land contract, and sometimes termed as
articles of agreement, is a legally binding contract that is made between the home seller and the
buyer. The home buyer agrees to make payments that include the purchase price of the home along
with interest payments, over a set amount of time. the home seller will hold the legal title to the property until the contract terms are met

Answer 2

installment land sales contract.

Question 3

A key difference in installment contracts compared to a traditional mortgage loan is in the way
in which defaults are handled. In a traditional mortgage loan, the lender goes through the legal
foreclosure process to force the sale of a home. Most of the time, installment contracts will have
a ____ clause. This allows the seller to end the contract at any point in which the buyer stops
making payments (according to the terms of the contract) and allows the seller to regain possession
of the property. It also allows for the seller to keep all payments previously made to the seller.

Answer 3

forfeiture

Question 4

____ mortgage- Also called a junior lien and sometimes interchangeable with a home equity loan, a second mortgage
is a type of property-secured loan taken out on the portion of a home that’s not under mortgage.

Answer 4

second mortgage

Question 5

____ mortgage- A type of loan used to fund the purchase of more than one piece of real
property. A blanket mortgage is often used for subdivision financing.

• use the land as collateral for the loan

Answer 5

Blanket Mortgages

Question 6

____- Obtaining a lower interest rate by paying additional points to the lender.

Answer 6

buydown

Question 7

–____ A loan secured by real estate which is for the purpose of funding the
construction of improvements or building(s) upon the property.

Answer 7

Construction loan

Question 8

___ mortgage - A method of financing in which the loan that finances the purchase
of a home also finances the purchase of personal items such as a washer and dryer,
refrigerators, stove, and other specified appliances.

Answer 8

package mortgage

Question 9

___ ___ mortgage - A form of secondary financing for the purchase of real property.
The seller extends to the buyer a junior mortgage which wraps around the existing in
addition to any superior mortgages already secured by the property

Answer 9

Wrap-around Mortgage