Pratice Chapter 11 - Financing the Single-Family Residence Flashcards

1
Q

Yield

A

The interest earned by an investor on an investment (or by a bank on money it has loaned). Also, called return.

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2
Q

Mortgage Banker

A

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.

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3
Q

Mortgage Broker

A

A broker who arranges a mortgage loan between a lender and a borrower for a fee.

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4
Q

Conventional Loan

A

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.

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5
Q

Loan to Value Ratio (LTV)

A

The percentage of a property’s value that a lender can or may loan to a borrower.

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6
Q

Private Mortgage Insurance (PMI)

A

Mortgage guaranty insurance available to conventional lenders on the first, high risk portion of a loan.

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7
Q

FHA-Insured Loan

A

A mortgage loan in which payments are insured by the Federal Housing Administration.

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7
Q

Mortgage Insurance Premium (MIP)

A

The amount paid by a mortgagor for mortgage insurance on an FHA-insured loan.

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8
Q

VA Guaranteed Loan

A

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.

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9
Q

Blanket Mortgage

A

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.

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10
Q

Buydown

A

Obtaining a lower interest rate by paying additional points to the lender.

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11
Q

Construction Loan

A

A loan secured by real estate which is for the purpose of funding the construction of improvements or building(s) upon the property.

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12
Q

Package Mortgage

A

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.

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13
Q

Wrap-around Mortgage

A

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.

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14
Q

Pre-Approval

A

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.

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15
Q

Pre-Qualification

A

A process whereby a loan officer takes information from a borrower and makes a tentative assessment of how much the lending institution is willing to lend them.

16
Q

Underwriter

A

An individual at a lending institution who determines credit worthiness in order to qualify an applicant for a loan.

17
Q

Underwriting

A

The criteria with which a lender determines the credit worthiness in order to qualify them for the loan.