Finance Flashcards
Promissory Note
promise to repay loan
Mortgage
pledge of property as collateral for loan
Hypothecation
use of real property as collateral for a mortgage loan
Payment
the periodic payment of interest and/or principal
Escrow Account
reserve account for periodic payments of taxes and insurance
Acceleration
the requirement to repay the loan before the scheduled due date
Escalation clause
allows lender to increase the loan’s interest rate
Lender must provide Consumer Financial Protection Bureau (CFPB) booklet
explaining loans, settlement costs and procedures
Loan Estimate of settlement costs within three days of application
Closing Disclosure three days before loan consummation
Federal Home Loan Bank System (FHLBS)
counterpart to the Fed for savings and loan associations
Amortized
payments include increasing increments of principal which retire loan balance over loan term
Fixed rate
interest rate does not change– can have for amortized or interest-only loans
Adjustable loans
interest rate fluctuates up or down with an index; payments may also vary
purchase money mortgage
a seller-financed loan to the buyer of portions of the purchase price using the property as collateral; usually accompanied by a senior underlying first mortgage
reverse annuity mortgage
a financial arrangement where the homeowner pledges equity to a lender in exchange for periodic payments of the pledged equity; in essence it is the periodic receipt of equity liquidation in exchange for an increase of debt owed on the property
