GMK Financial Terms Flashcards
Promissory Note ( AKA the note)
is the borrower’s promise to repay the loan.
Deed of trust (Trust Deed)
Deed of trust or Trust of Deed is used to secure repayment of a loan with real estate
Deed
it conveys Title to real property. There are 3 type of Deeds: General Warranty Deed, Grant Deed, and Quitclaim Deed.
Power of sales clause
The procedure the lender follows in order to foreclose on a piece of property depends on the presence or absence of a power of sale clause in the mortgage or deed of trust.
Judicial Forclosure
If the mortgage or deed of trust does not include a power of sale clause, the lender must file a lawsuit, requesting the court to enter an order of foreclosure.
Non-Judicial Foreclosure
The power of sale clause authorizes the lender to sell the property to pay off the balance on the loan
Forclosure
the sale of the property after a borrower default on a payments to satisfy the unpaid debt.
A Judicial foreclosure usually applies to a ____ and a Non-Judicial foreclosure usually applies to a _____.
Judicial foreclosure applies to a mortgage. Non-Judicial applies to the deed of trust.
Interest
Interest is the money that a lender earns from making a loan. Interest depends on the current market rates.
Partial Amortization
Partial Amortization occurs when the mortgage payment includes the interest due and a small payment towards the principal which will not reach zero by the end of the loan term. Therefore, a balloon payment is required as a final payment.
Discount points
Discount point is 1% of the loan amount to but the interest rate of the loan term which is known as Permanent Buy Down.
Fully Index Rate
Index + Margin = FIR (Fully Index Rate)
Securitization
The process of pooling similar types of loans to create mortgage back securities for sale in the financial markets.
