Financing Flashcards
Borrowers in California may pay off up to ___% of their original loan balance without penalty.
20%
Penalties may not amount to more than __ months’ interest.
6 months
With the ________ market, loans are sold directly to borrowers.
Primary market
With the ______ market, loans that are executed in the primary market are made to investors.
Secondary market
The Federal National Mortgage Association (______________ __________) purchases all types of home loans.
Fannie Mae
The Federal Home Loan Mortgage Corporation (_______ _______) purchases conventional loans.
Freddie Mac
The Government National Mortgage Association (_______ ______) purchases FHA and VA loans.
Ginnie Mae
These loans have no issuance backing from the government. The lender expects the borrower to pay back the loan or endure a foreclosure of the property.
Conventional loans
These loans are backed by the Department of Veteran Affairs that the lender will be compensated in the case of the borrower defaulting.
VA-guaranteed loans
These loans are administered through the HUD and protect the lender in case the borrower defaults on the loan.
Federal Housing Administration (FHA) loans
What does FmHa stand for and what does it do?
Farmer’s Home Administration loans
The loans purchase property and also guarantees loans made by other agencies.
What does the Cal-Vet Program do?
The California Department of Veterans Affairs helps veterans purchase property through the California Veterans Farm and Home Purchase Program. The CDVA obtains funds for loans through bond issues, then purchases property and sells it to the veteran on a land contract.
This loan is given to a developer or builder on a short-term basis. Funds are received according to construction completion phases. Once built, the builder/developer must obtain long term financing.
Construction loans
With this type of mortgage, a developer or contractor is given funds to purchase several lots of land. A release clause is common, which means the developer/contractor can sell a land parcel while maintaining the mortgage on the rest of the property.
Blanket mortgage
Personal property and real estate are used as collateral.
Package mortgage
Allows the lender to require payment whenever it wants to (mortgage).
Demand mortgage
The seller of the property is financing for the buyer. (mortgage)
Purchase money mortgage
(mortgage) This loan is in addition to the primary mortgage. In cases where default occurs, this loan may or may not be paid depending on whether or not the primary loan is fully paid.
Junior (second) mortgage
This type of mortgage gives the borrower the option of borrowing additional funds on top of what is initially borrowed, up to a certain amount, without complete documentation to rewrite the mortgage.
Open-end mortgage
Wraparound mortgage
Merge a new loan and existing loan. Payment is made on both mortgages to the wraparound mortgagee, who then forwards the payments to the appropriate mortgagee.
Over the life of this mortgage/loan, the interest rate can increase or decrease, depending on the Treasury Bill Index. There is a cap set on how much the rate can increase during each rate change period and life of loan.
Variable (adjustable) rate mortgage
These loans starts by charging a lower than normal fixed-rate loan, but after a certain amount of time, will “balloon.” The time at which the loan balloons varies withe ash lender, but is typically 5, 7, or 10 years. once the loan balloons, the borrower must pay off the loan.
Balloon Loan
Shared equity loan
The lender loans the funds at low interest rate in exchange for a portion of the property’s equity.
Equity loan
Is a second mortgage. It is used to access the equity in the home, to be utilized for making improvements to the property or other reasons.
In this type of amortization, the rate of an adjustable rate mortgage increases, but the payment each month stays the same. This results in the payment not being enough to pay the principal and interest, which means the deficit amount is tacked on to the outstanding principal balance.
Negative amortization
Term loan
Loan that is interest only. The total loan amount is due at the maturity date of the loan.
A loan that is principal and interest. At the maturity date, the loan will be paid in full.
Fully amortized loan
Loan that is principal and interest. This is short term, so a balloon payment will be made at the maturity date.
Partially amortized loan
Fixed rate loans.
Set interest rate over the life of the loan. Term, fully amortized and partially amortized loans can include this feature.
