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Real Estate > Conventional, FHA, and VA loans > Flashcards

Conventional, FHA, and VA loans Flashcards

1
Q

equity

A

home’s equity is the difference between how much your home is worth and how much you owe on your mortgage

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2
Q

interest

A

the charge for using someone else’s money

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3
Q

loan-to-value ratio (LTV)

A

calculated by dividing the amount borrowed by the appraised value of the property, expressed as a percentage

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4
Q

amortized loans

A

loan with scheduled, periodic payments that are applied to both the loan’s principal amount and the interest accrued

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5
Q

self-liquidating loans

A

a type of short term loan whereby the funds borrowed are used to buy some asset, which is in turn sold at the loan’s maturity to repay the loan.

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6
Q

fixed rate mortgage

A

interest rate does not change throughout the entire term of the loan

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7
Q

what are the four fixed-rate loans?

A
  1. fully amortized loan
  2. straight payment plan
  3. partially amortized loan
  4. biweekly mortgage
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8
Q

fully amortized plan

A

one where if you make every payment according to the original schedule on your term loan, your loan will be fully paid off by the end of the term

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9
Q

straight payment plan

A

periodic payments of interest only, with the principal to be paid in full at the end of the loan term

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10
Q

straight loan

A

A non amortized loan in which only interest is paid during the term of the loan, with the entire principal amount due with the final interest payment.

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11
Q

balloon payment

A

a larger-than-usual one-time payment at the end of the loan term

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12
Q

biweekly mortgages

A

loan where half payments are made every two weeks instead of once a month

extra money is applied entirely to the principal

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13
Q

adjustable-rate mortgages

A

a home loan with a variable interest rate. With an ARM, the initial interest rate is fixed for a period of time. After that, the interest rate applied on the outstanding balance resets periodically

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14
Q

adjustment period

A

the time within which the interest rate on an adjustable-rate mortgage (ARM) can reset

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15
Q

index

A

the benchmark interest rate an adjustable-rate mortgage’s (ARM’s) fully indexed interest rate is based on

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16
Q

margin

A

a percentage that determines the maximum interest rate that the borrower can set for the duration of the loan

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17
Q

cap

A

limit in ARM on how much the interest rate/payment can be raised in each adjustment period

18
Q

ceiling

A

maximum allowable interest rate

19
Q

negative amortization

A

whenever the loan payment for any period is less than the interest charged over that period so that the outstanding balance of the loan increases

20
Q

convertibility

A

ability to change a loan from an adjustable rate schedule to a fixed rate schedule

21
Q

assumable

A

assumable mortgage provides a buyer the opportunity to purchase a home by taking over the seller’s mortgage loan

22
Q

hybrid mortgage loan

A

a home loan with a fixed interest rate for a specific period of time, after which the rate adjusts periodically for the remaining loan term.

23
Q

amortization schedule

A

a table that lists each regular payment on a mortgage over time

24
Q

points

A

lower your interest rate in exchange paying for an upfront fee.

each point is 1% of new loan

25
Q

buydown

A

a mortgage financing technique with which the buyer attempts to obtain a lower interest rate for at least the first few years of the mortgage or possibly its entire life

26
Q

PITI

A

principal, interest, and tax and insurance reserves

what monthly loan payments consist of

27
Q

budget loan

A

A mortgage that consolidates insurance and tax payments into the principal and interest

28
Q

conventional loan

A

loans arranged entirely between borrower lending institutions

29
Q

government-backed loan

A

loans insured by FHA or guaranteed by the VA

actual loan comes from local lending institution

30
Q

loans directly from the government include

A

NJ Housing and Mortgage Finance Agency mortgages and Rural Economic Community Development

31
Q

private mortgage insurance

A

a type of mortgage insurance you might be required to pay for if you have a conventional loan

protects the lender not you

32
Q

Federal Housing Administration

A

subdivision of HUD that provides mortgage insurance on loans made by FHA-approved lenders

33
Q

FHA 203(b)

A

the most widely used FHA mortgage

required Mortgage insurance premium

max loan is percentage of appraised value

34
Q

amendatory clause

A

a disclosure that gives FHA homebuyers extra protection to cancel a transaction and receive a refund of any upfront earnest money if the value of the home is below the agreed-upon sales price.

35
Q

VA mortgages

A

intended for owner-occupied property owned or co-owned by a veteran

1-4 family dwellings only

36
Q

Certificate of Reasonable Value

A

VA appraisal

37
Q

funding fee

A

the VA’s version of mortgage insurance – your payment is due when you close on your home, and it can be financed if necessary.

38
Q

qualifications for VA loans

A

must have “other than dishonorable’ discharge
1. 90 consecutive days of active service during wartime
2. 181 days of consecutive service during peacetime
3. six years in the reserves or national guard

39
Q

The New Jersey Housing and Mortgage finance agency

A

offers below-market-interest loans, with little to no down payment for buyers who purchase property in urban target areas

40
Q

target areas

A

neighborhoods in which the state wishes to strengthen housing stock

41
Q

estimate of value

A

FHa appraisal

42
Q

FHA 203 k loan

A

type of government loan that can be used to fund both a home’s purchase and renovations under a single mortgage

Real Estate (21 decks)

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