Financing Real Estate

Question 1

Straight Note (Term Note)

Answer 1

INTEREST ONLY NOTE
usually has the lowest monthly payment
no principal payments made during the term
entire principal paid at maturity
higher interest rate

Question 2

Fully Amortized Installment Note

Answer 2

regular periodic payments of both principal and interest

amortization = liquidation of a financial obligation

as time goes by the amount paid to principal goes up and amount paid to interest does down

Question 3

Partially Amortized Note (Balloon Note)

Answer 3

allows lower monthly payments with a balloon payment at the end of the term

balloon payment = any payment which is significantly larger than the other payments

lender must notify when balloon payment is due not less than 90 days nor more than 150 days prior to the date the balloon payment is due

Question 4

The term used in financing to express the payment where the monthly sum of principal and interest is always the same is

Answer 4

Level payment plan is the plan for making substantially equal payments to reduce the loan and also include interest on the unpaid balance in the payment.

Question 5

Federal Land Banks provide long-term mortgage loans to farmers and ranchers. After the loan has been approved and the disbursement made, servicing of the loan is done by

Answer 5

Federal land banks were formed to provide mortgage loans to farmers and ranchers who were unable to secure financing elsewhere. These loans are serviced by National Farm Loan Associations and not by institutional lenders.