Mortgages Defined Flashcards

1
Q

Mortgage Loan

A

Loan used by borrowers to either purchase a residual property using a purchase money mortgage or to refinance or replace that mortgage

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2
Q

Rate and Term Refinance

A

Allows them to lower the interest rate or change the duration of the loan (or both) IOT lower monthly payments

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3
Q

Cash out Refinance

A

Allows borrower to increase his loan amount by accessing or tapping into the equity in his property to use that cash for a number of reasons

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4
Q

Amortize

A

Loan pays itself off including the amount borrowed and the interest charge by the end of the loan term

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5
Q

PITI

A

Principal, interest, taxes, and insurance: most mortgages today also require that a borrower remit a portion of their annual property taxes and homeowners insurance (T&I)

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6
Q

Loan to Value (LTV)

A

If a home is valued at $100,000 and the mortgage loan is for $75,000 the LTV is %75. The remaining $25,000 is the borrowers equity and not subject to a mortgage lien.

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7
Q

Three (3) documents involved in taking out a mortgage loan

A
  1. Deed: borrowers title (ownership) of property
  2. The Promissory Note: promise to pay over a specified time at specified rate of interest.
  3. Mortgage/Deed of Trust: creates a security interest and evidences a lien or encumbrance on the property.
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8
Q

Lien

A

legal claim of a lender against the property of a borrower to guarantee the repayment of debt

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9
Q

Deficiency Judgement

A

If funds recouped from a sale of a foreclosed home are insufficient to cover the debt, the borrower is still responsible for repayment.

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