Mortgages/Real Estate Financing Flashcards
adjustable rate mortgage
a mortgage loan in which the interest rate can change throughout the life of the loan
alienation clause
a clause in the mortgage loan that requires the loan to be paid off upon sale of the property
amortized loan
a type of mortgage loan in which the entire balance of the loan is paid off by the end of the term (period) of the loan.
Amortization simply refers to the amount of principal and interest paid each month over the course of your loan term. Near the beginning of a loan, the vast majority of your payment goes toward interest. … Each time the principal and interest adjust, the loan is re-amortized to be paid off at the end of the term.
annual cap
in an adjustable rate loan, the maximum amount the interest rate can be adjusted upward in any given year
annual percentage rate (APR)
the real interest rate one is paying on a loan, taking into account the interest rate charged for periodic payments as well as prepaid interest (points)
balloon payment
the amount remaining to be paid in a single payment at the end of a partially amortized loan
blanket mortgage
a mortgage loan used to cover more than one piece of property. This is sometimes used to buy multiple lots in a subdivision.
buydown
pre-paid interest that is paid at the beginning of a mortgage loan in order to lower the interest rate on the periodic payments
collateral
something of value that is used as security for a loan
Community Reinvestment Act
a federal law requiring banks to reinvest in their service area by making mortgage and other types of loans available
conforming loans
a type of mortgage loan that meets the requirements necessary for the loan to be sold on the secondary mortgage market
construction loan
a loan made to a builder to finance a construction project whereby the funds are released periodically during the life of the project
conventional loans
mortgage loans that meet criteria set by the lender but which also often meet the criteria set by Fannie Mae in the secondary mortgage market
debt service
the mortgage payment
default
a situation where a borrower doesn’t pay off the debt
deficiency judgment
a judgment rendered against a property owner after a successful lawsuit on the part of the lender, requiring payment of the difference between the mortgage loan amount and the proceeds of a foreclosure sale
discount rate
the interest rate set by the Federal Reserve that member banks charge each other for loans
down payment
a significant sum of money that may be the total cash part of the real estate purchase. The remainder of the purchase price would be satisfied with a mortgage loan.
equitable redemption
the right to pay the debt and recover the property after foreclosure but before the sale
equitable right of redemption
as it relates to a tax sale for nonpayment of taxes or a foreclosure sale for nonpayment of a mortgage loan debt, the right to redeem a property by paying the taxes and penalties or the loan debt before the sale of the property
equity buildup
the reduction of the mortgage loan debt by paying off the loan through the income of the property investment
