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Texas Real Estate Pre-License > Finance - Home Purchase > Flashcards

Finance - Home Purchase Flashcards

Dive into the financial aspects of home purchasing, including mortgage types, qualification processes, and loan documentation.

1
Q

Which real estate term is this?

Mortgages where the interest on the outstanding balance varies according to a benchmark.

A

Adjustable-Rate Mortgage

(ARM)

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2
Q

Which real estate term is this?

A breakdown of each monthly loan payment, showing amounts for interest and principal.

A

Amortization Table

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3
Q

Which real estate term is this?

A loan paid off in equal amounts at set intervals, covering both interest and principal.

A

Amortized Loan

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4
Q

Which real estate term is this?

A loan where only part of the principal is paid during the term, with a large final payment.

A

Balloon Loan or Payment

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5
Q

Which real estate term is this?

A deed offering no covenants, often used in foreclosures and tax sales.

A

Bargain and Sale Deed Form

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6
Q

Which real estate term is this?

A plan where the borrower pays half of the monthly payment every other week, paying off the mortgage faster.

A

Biweekly Mortgage Payment Plan

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7
Q

Which real estate term is this?

A refinance option where the borrower can access equity from the property in cash, possibly reducing the interest rate or changing the mortgage duration.

A

Cash-out Refinance

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8
Q

Which real estate term is this?

Interest calculated on both the initial principal and the accumulated interest from previous periods.

A

Compound Interest

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9
Q

Which real estate term is this?

A computerized network using online data to determine loan applicants’ eligibility and terms.

A

Computerized Loan Origination

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10
Q

Which real estate term is this?

A short-term loan with repayment beginning after the house is built.

A

Construction Loan/Interim Loan

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11
Q

Which real estate term is this?

A loan not backed or insured by any organization, federal or private, standard for private lenders.

A

Conventional Loan

Those jurisdictions, at time of writing, are the District of Columbia, Alabama, Maryland, North Carolina, and Virginia.

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12
Q

Which real estate term is this?

The interest rate charged to banks by the Federal Reserve for loans.

A

Discount Rate

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13
Q

Which real estate term is this?

An additional cost owed if the principal is paid off before a specified point in the loan agreement.

A

Early Payoff Penalty

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14
Q

Which real estate term is this?

Money given by a prospective buyer in a real estate transaction to show sincerity and financial capability.

A

Earnest Money

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15
Q

Which real estate term is this?

A mandatory step in a real estate transaction process, forwarded to a broker and into a client’s trust account within prescribed periods.

A

Earnest Money Deposit

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16
Q

Which real estate term is this?

A document used in real estate to certify certain financial details and permissions.

A

Estoppel Certificate

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17
Q

Which real estate term is this?

Loans insured by the federal government, classified as non-conventional.

A

FHA Loans

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18
Q

Which real estate term is this?

Mortgage with an interest rate that remains the same throughout the loan’s life.

A

Fixed Rate Mortgage

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19
Q

Which real estate term is this?

Loan where the borrower pays a lesser amount initially and a higher amount later.

A

Flexible Payment Plan

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20
Q

Which real estate term is this?

Funds voluntarily provided to a borrower, often from a family member or friend.

A

Gift/Gift Funds

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21
Q

Which real estate term is this?

Mortgages for purchasing energy-efficient homes or making eco-friendly improvements.

A

Green Mortgages

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22
Q

Which real estate term is this?

Allows owner to use home equity like a credit card, with repay and reuse ability.

A

Home Equity Lines of Credit

(HELOC)

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23
Q

Which real estate term is this?

Compares applicant’s gross monthly income to projected homeownership costs.

A

Housing Expense Ratio

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24
Q

Which real estate term is this?

Process of buying something with another party’s funds through a contractual arrangement.

A

Hypothecation

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25
# Which real estate term is this? A factor considered when evaluating borrower risk, comparing income to total debt.
Income-to-Debt Ratio
26
# Which real estate term is this? Loans that are paid in regular amounts at regular intervals, e.g., mortgages, car loans, and student loans.
Installment Loan
27
# Which real estate term is this? One made generally in a set payment amount at a set time interval.
Installment Payment
28
# Which real estate term is this? A short-term loan, often used during construction, that provides financing until permanent financing is secured
Interim Loan | (aka, Construction Loan)
29
# Which real estate term is this? The fee that a borrower pays to the lender to utilize the borrowed money, generally in terms of a percentage of the credit extended.
Interest
30
# Which real estate term is this? Installment payments in which the borrower only pays toward the interest accrued on their loan, but none of the principal.
Interest-only Payment
31
# Which real estate term is this? The amount of interest expressed as a percentage of the loan that is added to the cost of the loan in a given period of time. e.g., 4.25%.
Interest Rate
32
# Which real estate term is this? A loan backed by the Veterans Administration (VA) intended to lower a borrower’s interest rate by refinancing an existing VA-backed loan, or can be used to refinance an adjustable rate mortgage (ARM) into a fixed-rate mortgage.
Interest Rate Reduction Refinance Loans | (IRRRL)
33
# Which real estate term is this? An individual’s personal employment record, a factor commonly considered by lenders when evaluating a potential borrower.
Job History
34
# Which real estate term is this? A type of financing where the loan amount is higher than the conforming loan limits set by the Federal Housing Finance Agency (FHFA). The 2023 loan limit on conforming loans is $726,200 in most areas and $1,089,300 in high-cost areas such as Alaska and Hawaii.
Jumbo Loan ## Footnote aka jumbo mortgage
35
# Which real estate term is this? An action where one party takes over responsibility for another party's loan obligations.
Loan Assumption
36
# Which real estate term is this? Federally required documentation delivered to a loan applicant within 3 business days following a completed loan application, providing an explanation of the loan and estimated costs.
Loan Estimate
37
# Which real estate term is this? Charges from a lender upon entering a loan agreement that cover the cost of processing the loan.
Loan Origination Fee
38
# Which real estate term is this? A measure used in finance that compares the loan on a maximum percentage of the collateral/subject that they will lend, generally from 80% to 100%.
Loan-to-Value Ratio | (LVR)
39
# Which real estate term is this? Designed to finance the purchase or refinancing of a manufactured/mobile home and may be deemed as real property or as personal property.
Manufactured Home Loans
40
# Which real estate term is this? A set amount that a lender finds to be the appropriate limit on debts to income before posing a threat to the borrower’s perceived ability to repay.
Maximum Debt Ratio
41
# Which real estate term is this? A conditional transfer or pledge of real estate as security for the payment of a debt. These are secured, fully amortized loans.
Mortgage
42
# Which real estate term is this? Limits its activities to originating and servicing mortgage loans.
Mortgage Bank
43
# Which real estate term is this? The percentage charged on a mortgage that must be paid above the principal amount. It is essentially the cost of the borrowed money for the loan.
Mortgage Interest
44
# Which real estate term is this? The market where borrowers and mortgage lenders meet to negotiate terms and conduct mortgage transactions. Participants include mortgage brokers, mortgage bankers, credit unions, and commercial banks.
Mortgage Market/Primary Mortgage Market
45
# Which real estate term is this? Loans that do not fit within the standards set by Fannie Mae and Freddie Mac.
Nonconforming Loans
46
# Which real estate term is this? Any loan insured by FHA or the VA.
Non-conventional Loan
47
# Which real estate term is this? A fee charged by a lender to process a new loan application.
Origination Fee/Underwriting Fee
48
# Which real estate term is this? An agreement allowing a lender to sell a portion of a loan to an outside participant.
Participation Agreement
49
# Which real estate term is this? A document showing a buyer's funds will pay the seller’s loan in full.
Payoff Statement
50
# Which real estate term is this? Evidence that a potential buyer has been tentatively approved by a lender.
Pre-approval Letter
51
# Which real estate term is this? An added cost if a loan is paid off before a designated date.
Prepayment Penalty
52
# Which real estate term is this? The part of a mortgage loan contract that obligates the borrower to repay the loaned money.
Promissory Note
53
# Which real estate term is this? Restructuring or replacing one loan with a new loan.
Refinance
54
# Which real estate term is this? Tax incentives for rehabilitating historical structures.
Rehabilitation Tax Credits
55
# Which real estate term is this? Home loan for homeowners aged 62+ with no monthly payments.
Reverse Mortgage/Home Equity Conversion Mortgage | (HECM)
56
# Which real estate term is this? Owner or seller of property replaces the bank, holding the note and title.
Seller/Owner Financing
57
# Which real estate term is this? Loans extended to people with lower credit ratings, often with higher interest rates.
Subprime Loans
58
# Which real estate term is this? FHA-insured loans for manufactured homes or lots.
Title I Loans
59
# Which real estate term is this? Shows how much of an applicant's income is spent on outstanding debt.
Total Debt-to-Income Ratio
60
# Which real estate term is this? A mortgage review process to confirm loan insurability.
Underwriter Review
61
# Which real estate term is this? Standards and guidelines used by lenders to evaluate loan applicants.
Underwriting Criteria
62
# Which real estate term is this? A charge by a lender to evaluate a borrower's loan application. It covers the cost of verifying financial information and assessing the risk of the loan.
Underwriting Fee | (aka, Origination Fee)
63
# Which real estate term is this? A nationally standardized mortgage loan application form used in most conventional processes.
Uniform Residential Loan Application
64
# Which real estate term is this? Insures loans for active members and veterans of the armed services similar to FHA.
U.S. VA Loans
65
# Which real estate term is this? Strict documentation requirements for proving necessary cash deposits before mortgage closing.
Verification of Deposit
66
# Which real estate term is this? Process used by mortgage lenders to review a borrower's employment history for job stability.
Verification of Employment | (VOE)
67
# Which real estate term is this? A mortgage that covers funding for more than one piece of property.
Blanket Mortgage
68
# Which real estate term is this? An amount benefiting a party, such as during a property closing.
Credit
69
# Which real estate term is this? A cost to a party, such as in a real estate transaction.
Debit
70
# Which real estate term is this? A method allowing borrowers to reduce interest rates by paying upfront.
Discount Points
71
# Which real estate term is this? A mortgage with an interest rate that remains the same throughout the life of the loan.
Fixed Rate Mortgage
72
# Which real estate term is this? Allows for the borrower to borrow more money on the original loan amount, up to a certain limit.
Open-end Mortgage
73
# Which real estate term is this? Secured by real estate and include the personal property and furniture in a ‘package’ which is then considered to be the purchase price of the home.
Package Mortgage
74
# Which real estate term is this? A form of creative financing with a homeowner’s original loan that ‘wraps around’ the first loan, without paying it off.
Wraparound Loan

Texas Real Estate Pre-License (18 decks)

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