Financing 8%

Question 1

Discount points definition

Answer 1

An option at closing to permanently reduce a loan’s interest rate

Question 2

Buydown defintion

Answer 2

Interest pre-payment at closing to temporarily reduce interest rate, usually for a period of 1-3 years.

Question 3

APR?

Answer 3

standardized measure for interest rate and other loan cost

Question 4

budget mortgage?

Answer 4

Includes PITI (principal, interest, taxes, and insurance)
Most common mortgage

Question 5

Deed of trust?

Define defeasance, acceleration, due on sale?

Answer 5

primary security instrument referred to as Title Theory because the lender/trustee holds Legal Title to the property until the mortgage loan is paid in full.
Defeasance- orders the lender or trustee to immediately release full title to the borrower once the loan is paid in full.
Acceleration- makes the entire debt due immediately if there’s borrower default
Due on sale- Requires the borrower to repay the loan when transferring ownership to another.

Question 6

Amortized loan def?

Answer 6

Loan principal is paid down over the life of the loan.

Question 7

Land contract/contract for deed

Answer 7

Requires buyer to make installment payments to the seller for property purchase. Seller retains title while buyer gets equitable title.

Question 8

Purchase $ mortgage

Answer 8

Loan a seller issues to the buyer as part of the transaction. This typically occurs when the buyer cannot qualify for a mortgage through traditional means.

Question 9

Usury is used when?

Answer 9

Credit cards typically

Question 10

Loan estimate?

Answer 10

Gives estimate of cost buyer will pay at closing

Question 11

Closing disclosures need to issued__?

Answer 11

3 days prior to closing.