Other Mortgage Products Flashcards
What is a Blanket Mortgage?
A Mortgage that covers more than one parcel of land or lot. Ex: Usually used to finance subdivision developments.
A Blanket Mortgage usually has a Partial Release Clause—what is that?`
A Partial Release Clause the borrower to pay a certain amount to release some of the lots with the mortgage continuing to cover remaining lots.
Describe a Bridge Mortgage
- ) Occurs between the termination of one mortgage and the beginning of the next.
- ) The Bridge Mortgage is repaid when the next mortgage is taken out.
- ) Its temporary, and used most commonly for construction financing; a less common use is for someone buying a new home before selling the old one.
What is a Cash-out Mortgage?
A Mortgage that allows the borrower to get cash for the equity that has built up in a property. Can be either a first or second mortgage.
What are two examples of a Cash-out Mortgage?
- ) Home Equity Loan
2. ) Refinances and receives cash at the closing
Describe a Home Equity Loan/Home Equity Line of Credit
- ) The loan is secured by a mortgage on one’s principal residence.
- ) It is a one-time loan for a specific amount and specific purpose.
- ) A HELOC is considered an open-end loan.
- ) May be a senior or junior lien.
Describe a Construction Loan, also known as an Interim Loan
It is a temporary loan used to finance the construction of improvements and buildings on land.
How is the money received for a Construction Loan?
A fixed disbursement plan pays a percentage of funds at a set time; a series of
predetermined disbursements, called obligatory advances, are paid out at various stages of
construction.
What is a Take Out Loan?
Once construction is completed, the Construction Loan is replaced by permanent financing, called a Take Out Loan.
What is a Permanent Construction Loan?
A permanent construction loan is a special type of construction loan where there is only
one loan and one closing, with no take out loan; there is a fixed disbursement schedule for
loan funds, and the loan automatically converts to an amortizing first mortgage when
construction is finished.
Describe the Equity Participation Mortgage/Participation Plan
- ) Used mostly for commercial real estate projects.
2. ) Permits the lender to share part of the earnings, income, or profits from a real estate project.
Describe a Package Mortgage
1.) – A mortgage that includes personal property, like appliances, in
the property sale and all are financed together in one contract,
but generally requires an added security instrument (UCC) to
lien the personal property portion of the sale.
2.) Commonly used to buy a furnished condominium.
