Ohio Prep Book (Kindle) Flashcards
___ is the increase in the value of a property due to changes in market conditions, inflation, or other causes.
Appreciation
When ownership of a mortgage is transferred from one company or individual to another, it is called an ___.
Assignment
A mortgage loan that requires the remaining principal balance be paid at a specific point in time is a ___.
Balloon mortgage
Why are bridge loans not used much anymore?
- More second mortgage lenders now will lend at a high loan to value.
- Sellers would rather accept offers from Buyers who have already sold their property.
A title free of liens or legal questions as to ownership of the property is called a ___ title.
Clear (no challenges can be made to its legality)
What is the collateral in a home loan?
The property itself
What is the adjustment date on an adjustable-rate mortgage?
The date the interest rate changes (adjusts)
What is the deposit made by a potential buyer to show he is serious about buying a house called?
Earnest money deposit
A right-of-way which gives persons other than the owner access to or over a property is known as ___.
An easement
What is a housing development created by dividing a tract of land into individual lots?
Subdivision
When someone contributes to the construction or rehabilitation of a property with labor or services rather than cash, that contribution is called ___.
Sweat equity
___ is an adjustable rate mortgage with one interest rate for the first five or seven years and a different rate for the remainder of the term.
Two-step mortgage
What is a legal document evidencing a person’s right to or ownership of a property?
Title
What is a written document that transfer personal property from one owner to another?
Bill of sale
An oral or written agreement that is binding in a court of law is called ___.
A contract
The ___ is the amount paid down in cash as the initial upfront portion of the total amount due.
Down payment
The female executor named in a will to administer an estate is called ___.
An executrix
The greatest possible interest a person can have in real estate is called ___.
Fee simple
___ is required in federally designated flood areas and does compensate for physical property damage resulting from flooding.
Flood insurance
Government loans are either insured by ___, or guaranteed by ___ or ___.
Federal Housing Administration (FHA); Veterans Affairs (VA); Rural Housing Service (RHS)
Mortgages are not government loans are called ___ loans.
Conventional
The ___ is the person conveying an interest in real property to another party.
Grantor
Insurance covering physical damage to a property from fire, wind, vandalism, or other hazards is called ___.
Hazard insurance
A ___ asset is either cash or something easily turned into cash.
Liquid
Another term for the lender in a mortgage agreement is the ___.
Mortgagee
If you are buying a house and asking the seller to provide all or part of the financing, you are asking for ___ financing.
Owner
What is a point?
1% of the amount of the mortgage
A ___ derives power from a legal document and grants someone complete or limited authority on behalf of someone else.
Power of attorney
Principal has two definitions - what are they?
- The amount borrowed or remaining unpaid
2. The part of the monthly payment that reduces the remaining balance of a mortgage
A ___ is a written promise to repay a specific amount over a specified period of time.
Promissory note
What is a real estate agent?
A licensed person who negotiates and transacts the sale of real estate
When does an assumption take place?
When the buyer assumes the seller’s mortgage
A legal document conveying title to a property is a ___.
Deed
A ___ clause allows the lender to demand payment, most commonly if the borrower defaults on the loan or transfers title to someone without informing the lender.
Acceleration
What is the most common type of bankruptcy?
Chapter 7 No Asset
A ___ is someone who acts as an agent and brings two parties together for a transaction and earns a fee for this.
Broker
An appraiser’s estimate of the physical condition of a building is called ___.
Effective age
What is the difference between the fair market value of a property and the amount still owed on the mortgage (and other liens)?
Equity
The person to whom an interest in real property is conveyed is the ___.
Grantee
A mortgage loan, usually in second position, which allows the borrower to obtain cash drawn against the equity of his home, up to a predetermined amount, is known as ___.
A home equity line of credit
In the event of death in joint tenancy, who gets the property?
The survivor - they own the property in its entirety
A ___ is a rate guaranteed by the lender for a certain period of time at a certain cost to the buyer.
Lock-in
A mortgage with a lien position subordinate to the first mortgage on a piece of property is called a ___.
Second mortgage
In this type of mortgage, the interest rate adjusts periodically according to corresponding fluctuations in an index
Adjustable-rate mortgage (ARM)
___ is a table showing how much of each payment is applied to interest and how much to principal.
Amortization schedule
Mortgage in which you make the payments every 2 weeks
Bi-weekly mortgage
The limitation on how much the loan may adjust over a period of time and for the life of the loan
Cap
What is fair market value?
The highest price that a buyer, willing but not compelled to buy, would pay, and the lowest a seller, willing but not compelled to sell, would accept
A lender’s agreement to make a loan to a specific borrower on a specific property is called a ___.
Firm commitment
A ___ is an alternative financing option that allows home buyers to lease a home with an option to buy.
Lease-option
What is a sum of borrowed money generally repaid with interest?
Loan
The date on which the principal balance of a loan, bond, or other financial instrument becomes due and payable
Maturity
The borrower in a mortgage agreement is called the ___.
Mortgagor
True or false - origination fees apply to government and conventional loans.
True
A government loan is usually ___%.
1%
The ___ applies to the original amortization term minus the number of payments that have been applied.
Remaining term
___ is a credit arrangement, such as a credit card, which allows a customer to borrow against a pre-approved line of credit when purchasing goods and services.
Revolving debt
A ___ is an agreement in which the owner of a property provides financing, often in combination with an assumable mortgage
Sell carry-back
State or local tax payable when title passes from one owner to another is called ___.
Transfer tax
___ is a federal law requiring lenders to fully disclose in writing the terms and conditions of a mortgage, including the annual percentage rate and other charges.
Truth-in-Lending
Over time, what happens to the interest portion and principal as the loan balance decreases during amortization?
Interest portion DECREASES
Principal INCREASES
The valuation placed on property by a public tax assessor for purposes of taxation is called ___.
Assessed value
A certificate of ___ is a document issued by the VA that certifies a veteran’s eligibility for a VA loan.
Eligibility
An unwritten body of law based on general custom in England and used to an extent in some states
Common law
Recent sales of similar properties in nearby areas and used to help determine the market value of a property are called ___
Comparable sales (comps)
A person to whom money is owed
Creditor
An ___ gives a licensed real estate agent the exclusive right to sell a property for a specified period of time.
Exclusive listing
The mortgage that is in first place among any loans recorded against a property and usually refers to the date in which loans are recorded
First mortgage
The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property is called a ___.
Foreclosure
True or false - 401(k)/403B plans are an acceptable source of down payment for most types of loans
True
A ___ usually kicks in after fifteen days on a first mortgage and is a penalty a borrower must pay.
Late charge
A person’s financial obligations are called ___.
Liabilities
___ is a value created according to a government formula intended to reflect the true annual cost of borrowing expressed as a percentage.
Annual percentage rate (APR)
True or false - APR is the note rate on your loan.
False - APR is NOT the note rate on your loan. It is always higher than the actual note rate on your loan.
When a borrower refinances his mortgage at a higher amount than the current loan balance with the intention of pulling out money for personal use, it is referred to as a ___.
Cash-out refinance
A time deposit held in a bank which pays a certain amount of interest to the depositor
Certifiate of deposit
___ are also sometimes called Homeowners Association Fees and are paid by the individual owners of condos or planned unit developments and are used to maintain the property and common areas.
Common area assessments
In simple terms, what is debt?
An amount owed to another
The lawful expulsion of an occupant from real property
Eviction
Which of the following would not be paid by escrow disbursements?
A. Real estate taxes
B. Hazard insurance
C. Mortgage insurance
D. Personal property taxes
D. Personal property taxes - not a typical escrow disbursement
The other three are typically paid by escrow
Written agreement between property owner and tenant laying out the terms of the agreement including payment and period of the agreement including payment and period of time
Lease
Another name for Home Equity Conversion Mortgage
Reverse annuity mortgage
A ___ is the firm making the loan or an individual representing the firm making the loan.
Lender
The difference between the interest rate and the index on an adjustable rate mortgage
Margin
A mortgage company which originates loans, then places with a variety of other lending institutions
Mortgage broker
The interest rate stated on a mortgage note
Note rate
A payment insufficient to cover the scheduled monthly payment on a mortgage loan
Partial payment
A ___ reduces the principal on a loan before the due date and can result from a sale, the owner’s decision to pay off the lean early, or foreclosure.
Prepayment
A written contract signed by buyer and seller stating the terms and conditions under which a property will be sold
Purchase agreement
Public official who keeps records of real property transactions in their area
Recorder; also known as county clerk; registrar of deeds
Outstanding balance of principal only on a mortgage that does not include interest or any other charges
Principal balance
Land and appurtenances, including anything of a permanent nature such as structures, trees, minerals, and the interest, benefits and inherent rights thereof
Real property
In joint tenancy, if one person dies and the other inherits the property, this is called ___.
Right of survivorship
A mortgage or other type of lien that has a priority lower than that of the first mortgage is called ___.
Subordinate financing
Insurance that protects the lender or the buyer against loss arising from disputes over ownership of a property is ___.
Title insurance
___ places a value on property for the purpose of taxation
Assessment
Certificate of Reasonable Value (CRV) applies to a ___ loan.
VA
An additional individual who is both obligated on the loan and is on the title to the property
Co-borrower
When a borrower falls behind, the lender contacts them in an effort to bring the loan current. The loan then goes to ___ and the lender must mail and record certain documents in case they have to foreclose on the property.
Collection
A ____ is real property where all the owners own the property, common areas, and building together with the exception of the interior of the unit to which they have title. It is a type of ownership.
Condominium
An organization which gathers, records, updates, and stores financial and public records information about the payment records of individuals being considered for credit
Credit repository
In some states, a recorded mortgage is replaced by a ___.
Deed of trust
Failure to make mortgage payments when they are due
Delinquency
___ is a congressionally chartered, shareholder-owned company that is the nation’s largest supplier of home mortgage funds.
Federal National Mortgage Association (Fannie Mae)
___ is government owned organization that provides funds to lenders for making government loans (FHA and VA)
Ginnie Mae
A jumbo loan is anything over ___.
$417,000
___ insurance protects against claims against a property owner for negligence or bodily injury or property damage to another party.
Liability
A lender refers to the process of betting new loans as ___.
Loan origination
The percentage relationship between the amount of the loan and the appraised value or sales price is called ___.
Loan to value
Type of credit report that reports the raw data pulled from 2+ major credit repositories
Merged credit report
Legal document pledging a property to the lender as security for payment of a debt
Mortgage
The interest rate on a “no points” loan is ___ (higher or lower) than on a loan where you pay one point.
Higher
Total amount of principal owed on a mortgage before any payments are made
Original principal balance
How does a planned unit development differ from a condominium?
Planned unit development - individuals actually own the building or unit they live in, but common areas are owned jointly with other members
Condo - individuals owns the airspace of his unit, but common areas and the buildings are owned jointly
Type of cap that limits the amount the interest rate can increase or decrease over the life of the mortgage
Life cap
The change in your mortgage without having to refinance
Modification
Often referred to as a “rate and term refinance,” this type of re-finance cis calculated to cover the balance due on the current loan and any costs associated with obtaining the new mortgage.
No cash-out refinance
Legal document requiring a borrower to repay a mortgage loan at a stated interest rate during a specified period of time
Note
The date when a new monthly payment amount takes effect on an ARM or graduated-payment mortgage
Payment change date
A ___ deed transfers without warranty whatever interest or title a grantor may have at the time the conveyance is made.
Quitclaim
A ___ is the process of paying off one loan with the proceeds from a new loan using the same property as security.
Refinance transaction
The amount of principal that has not yet been repaid is called the ___.
Remaining balance
A ___ is an arrangement made to repay delinquent installments or advances.
Repayment plan
What is a provision in an agreement that requires the owner of a property to give another party the first opportunity to purchase or lease the property before he offers it for sale or lease to others?
Right of first refusal
A technique in which a seller deeds property to a buyer for a consideration and the buyer simultaneously leases the property back to the seller
Sale-leaseback
In a tenancy in common, what happens to ownership in the event of death?
Ownership does NOT pass to the survivors - it goes through the estate of the deceased.
A ___ is an organization that collects principal and interest payments from borrowers and manages borrowers’ escrow accounts.
Servicer
What happens in third party origination?
A lender uses another party to completely or partially originate, process, underwrite, close, fund, or package the mortgages it plans to deliver to the secondary mortgage market.
A ___ would show that the seller is the legal owner and there are no outstanding liens or other claims against the property.
Title search
A ___ is a fiduciary who holds or controls property for the benefit of another.
Trustee
A person who is ___ can use a portion of a fund such as a n individual retirement fund but must pay taxes on funds that are withdrawn.
Vested
A mortgage that can be assumed by the buyer when a home is sold
Assumable mortgage
A call option is most similar to an ___ clause.
Acceleration
A ___ is an analysis of the transfers of title to a piece of property over the years.
Chain of title
A ___ title is any condition revealed by a title search that adversely affects the title to real estate.
Cloud on
What are the two types of closing costs?
Non-recurring closing costs
Pre-paid items (occur over time, like property taxes and homeowners insurance)
___ determines that property acquired by a married couple during their marriage is considered to be jointly owned.
Community property
Changing the ownership of an existing building to the condominium form of ownership is called a ___.
Condominium conversion
A ___ ARM is an adjustable rate mortgage that allows the borrower to change the ARM to a fixed rate mortgage within a specific time.
Convertible
