Pratice Chapter 11 - Financing the Single-Family Residence Flashcards
Yield
The interest earned by an investor on an investment (or by a bank on money it has loaned). Also, called return.
Mortgage Banker
A person whose principal business is the originating, financing, closing, selling and servicing of loans secured by real property for institutional lenders on a contractual basis.
Mortgage Broker
A broker who arranges a mortgage loan between a lender and a borrower for a fee.
Conventional Loan
A mortgage securing a loan made by investors without governmental underwriting, i.e., which is not FHA insured or VA guaranteed. This type of loan is customarily made by a bank or savings and loan association.
Loan to Value Ratio (LTV)
The percentage of a property’s value that a lender can or may loan to a borrower.
Private Mortgage Insurance (PMI)
Mortgage guaranty insurance available to conventional lenders on the first, high risk portion of a loan.
FHA-Insured Loan
A mortgage loan in which payments are insured by the Federal Housing Administration.
Mortgage Insurance Premium (MIP)
The amount paid by a mortgagor for mortgage insurance on an FHA-insured loan.
VA Guaranteed Loan
A loan made to qualified veterans for the purchase of real property wherein the Department of Veteran’s Affairs guarantees the lender payment of the mortgage.
Blanket Mortgage
A type of loan used to fund the purchase of more than one piece of real property. A blanket mortgage is often used for subdivision financing.
Buydown
Obtaining a lower interest rate by paying additional points to the lender.
Construction Loan
A loan secured by real estate which is for the purpose of funding the construction of improvements or building(s) upon the property.
Package Mortgage
A method of financing in which the loan that finances the purchase of a home also finances the purchase of personal items such as a washer and dryer, refrigerators, stove, and other specified appliances.
Wrap-around Mortgage
A form of secondary financing for the purchase of real property. The seller extends to the buyer a junior mortgage which wraps around the existing in addition to any superior mortgages already secured by the property.
Pre-Approval
A step above pre-qualification, an evaluation of a potential borrower by a lender that determines whether the borrower qualifies for a loan from the lender, or the maximum amount that the lender would be willing to lend.
