Finance Basic 6 Flashcards
Motivations (Borrower) -
- Oppurtunity: (Financing) Couldn’t become H_____ Any Other Way
- Leverage: Increase R___ of R____ by Using Borrowed Money
- Tax Advantage: Interest is T__ Deductable
Motivations (Borrower) -
- Oppurtunity: (Financing) Couldn’t become Homeowner Any Other Way
- Leverage: Increase Rate of Return by Using Borrowed Money
- Tax Advantage: Interest is Tax Deductable
Chap 6
Original Loan Amount or Current Loan Balance is?
Principal in Loan -
Original Loan Amount or Current Loan Balance
Chap 6
L______
Increase of Rate of Return - Using Borrower’s Money
Leverage -
Increase of Rate of Return - Using Borrower’s Money.
Chap 6
Motivated by High Yield**, **Low Risk and Good Security
The Lender -
Motivated by High Yield**, **Low Risk and Good Security
Chap 6
- Personal Promise to Repay - Serves As Evidence of Debt.
- No Collateral Referenced
- States Parties; Amt of Debt; Rate; Pattern of Pymts
Promissory Note -
- Personal Promise to Repay - Serves As Evidence of Debt.
- No Collateral Referenced
- States Parties; Amt of Debt; Rate; Pattern of Pymts
Chap 6
P_______ N____
States:
- Lender/Borrower,
- Debt Amt,
- Rate,
- Pattern of Pymts
- No Collateral Stated
Promissory Note
States:
- Lender/Borrower,
- Debt Amt,
- Rate,
- Pattern of Pymts
- No Collateral Stated
Chap 6
- Hypothecates Property as Collateral, with Provisions to Foreclose.
- States Legal Description and
- Recorded by Lender.
Mortgage or Trust Deed -
- Hypothecates Property as Collateral, with Provisions to Foreclose.
- States Legal Description and
- Recorded by Lender.
Chap 6
Level Payments of Principal and Interest Only
Amortized - P&I
Level Payments of Principal and Interest Only
Chap 6
“One Payment” is Larger than Monthly Payments. May be Partially Amortized with Last Payment being a Baloon.
Balloon Payment -
“One Payment” is Larger than Monthly Payments. May be Partially Amortized with Last Payment being a Baloon
Chap 6
PITI Payments - Principal, Interest, Taxes and Insurance are called?
Budget -
PITI Payments - Principal, Interest, Taxes and Insurance
Chap 6
Str_____ Loan aka Int___ Term Loan/T____ Loan -
Interest Only Payments. Principal Due at End of Loan
Example: Construction loans.
Straight Loan aka Interim Loan/Term Loan -
Interest Only Payments. Principal Due at End of Loan
Example: Construction Loan
Chap 6
Principal Only Payments (Amoritized) and Interest Added to Loan Balance.
Negative Amortization -
Principal Only Payments (Amoritized), and Interest Added to Loan Balance
Chap 6
Payments on Real Estate Loans:
Are They Paid in Advance or in Arrears?
Arrears -
Payments on Real Estate Loans“Paid in Arrears.”
Chap 6
Type of Loan that is Insured by Federal Housing Admin, HUD
FHA Loan -
Insured by Federal Housing Admin, HUD
Chap 6
Guaranteed by the Dept of Veteran’s Affairs
VA Loan -
Guaranteed by the Dept of Veteran’s Affairs
Chap 6
Made by Lending Institutions but Without Government Guarantee or Insurance.
Conventional Loan -
Made by Lending Institutions but Without Government Guarantee or Insurance.
Chap 6