Nat 6 Flashcards
Increase in rate of return through using borrowed money
Leverage
A personal promise to repay the debt.
Promissory note
Hypothecated the property as collateral for the dept
Mortgage or trust deed
Level or constant payments including principal and interest
Amortized
Payments made PITI
Taxes and insurance go into an escrow account
Budget
Interest only during term of loan with principal due at maturity
Straight
The monthly payments are less than the interest
Negative amortization
Payments on real estate loans are paid in
Arrears
Loan that is insured by the federal housing administration HUD
FHA Loans
Loan guaranteed by the department of Veterans Affairs
VA Loan
Made by lending institutes but with out government guarantee or insurance
Conventional loans
Seller carryback financing
Purchase money loan
Seller remains liable for the existing loan and agrees to create a new loan for the buyer for a greater amount and at higher interest rates
Wraparound loan
Interest rate and payments change periodically during the life of the loan
Arms length
Adjustable rate loan
Loan in which payments are lower in the early years but increase in intervals until the loan becomes fully amortized
Graduated payment loan
Loan secured with more than one property
Blanket loan
Allows borrower to borrow more funds within the same loan.
Like a credit card
Open end loan
Funds are advanced in installments as construction progresses
Construction ( interim) loan
Normal long term financing replacing and paying off construction loan
Take-out loan
The lender makes monthly payments to the borrower
Reverse annuity loan (RAM)
Loan which has highest priority
Superior loan
Loan that is lower priority to another loan
Junior loan
Loan in which the borrower is not held personally liable for the debt
(Without personal liability)
Non-recourse loan
Allows lender to declare the loan balance immediate payable if borrower defaults
Acceleration clause
Allows lender to declare debt due and payable if property is sold
Alienation clause
Allows lender to charge prepayment penalty if loan is paid off early
Prepayment clause
States that the note and mortgage are null and void when the borrower pays off the debt
(Defeated)
Defeasance clause
Allows individual parcels to be released from a blanket mortgage
Release clause
Calls for existing loan to be placed in lower priority position to another lien
Subordination clause
Charging more than the rate set by law
Usury
The rate specified in the note or contract
Contract rate/ note rate
In Arizona this is the rate that would apply when no specific rate appears in an agreement. Also the rate which would apply to judgments unless he court stipulated a different rate
Legal rate
