Practice | Unit 7 Flashcards
Fair and Accurate Credit Transactions Act (FACTA)
Requires that credit bureaus provide free reports annually
Loan-to-Value Ratio (LTV)
Ratio of debt to value of the property
When does PMI automatically terminate
When the borrower accumulates 22% in equity
VA-Guaranteed Loans
Guaranteed by the U.S. Department of Veterans Affairs & are available to eligible veterans and spouses
Farm Service Agency (FSA)
Programs to help families purchase or operate family farms and homes in rural areas
Adjustable-Rate Mortgage (ARM)
Begins with a lower initial rate of interest that changes over the life of the loan, based on a specified index
Growing Equity Mortgage
Aka rapid-payoff
Loan has a fixed interest rate but the principal payments are increased according to an index so that the loan is paid off more quickly
Reverse Annuity Mortgage (RAM)
Aimed at senior citizens (62+) who have paid off their houses but can’t afford to stay there
Purchase Money Mortgage (PMM)
Seller transfers title and takes back a note and mortgage. Borrower makes principal and interest payments to former owner
Blanket Loan
Cover more than one parcel or lot, and a partial release clause allows a borrower to pay off part of the loan to remove the liens from one parcel or lot at a time
Wraparound Loan
With a wrap-around mortgage, the seller keeps the existing mortgage on the home, offers seller financing to the buyer and wraps the buyer’s loan into the existing mortgage. In this situation, the seller takes on the role of the lender.
Open-End Loan
An open-ended loan is a loan that does not have a definite end date.
Examples of open-ended loans include lines of credit and credit cards
Sale-and-Leaseback
Used to finance large commercial or industrial properties and allow a business to free up money tied in real estate to be used as working capital
Ex) The owner-occupant sells its property to the REIT, which leases it back to the seller.
Buydown
Payment made to the lender at closing to reduce the interest rate on the loan
