Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Fundamentals of Real Estate > PRRE - Unit 6: Mortgages > Flashcards

PRRE - Unit 6: Mortgages Flashcards

1
Q

____________ The gradual retirement of a debt by means of equal blended payments of both principal and interest made on a regular, periodic basis.

A

Amortization

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

_________ The length of time required to repay a mortgage using equal, periodic payments.

A

Amortization Period

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

____________ As it pertains to mortgages, it is a clause in a mortgage agreement that establishes a right or obligation for the parties to the transaction.

A

Covenant

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

___________ The market value of the property, less the outstanding balance of the mortgage and any other financial obligation registered against the property.

A

Equity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

____________ The legal process by which the lender (mortgage) takes possession and ownership of a property due to borrower’s failure to comply with the terms and conditions of the mortgage agreement

A

Foreclosure

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

___________ A person bound by a promise to pay another’s debt or perform another’s obligation.

A

Guarantor

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

______________ The amount charged by the lender for the use of borrowed funds, calculated as a percentage of the principal

A

Interest Rate

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

______________ The end of the mortgage term when the borrower may have the options to pay off the remaining balance on the mortgage, renew it with the existing lender, or transfer it to another lender.

A

Maturity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

_____________ The pledging of real property to a lender as security for a debt. In other words, a mortgage represents the security over property given to the lender for repayment of the loan.

A

Mortgage

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

_________________ The process by which a borrower agrees to another mortgage term with the current lender when the current term of the mortgage expires.

A

Mortgage Renewal

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

____________ The period of time for which the borrower is committed to a specific interest rate, lender, and the associated obligations under the mortgage agreement.

A

Mortgage Term

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

_________ The amount of funds originally borrowed or the portion still owing on a mortgage.

A

Principal

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

___________ The act of performing the borrower’s obligations and consequential discharge of the mortgage on the property

A

Redemption

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

___________ An individual employed by a lender or insurer who is responsible for verifying the mortgage application information and supporting documentation, making a risk assessment of the applicant(s) and the subject property, and approving or declining the mortgage based on this assessment.

A

Underwriter

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Interest rates fluctuate based on these 2 things

A
  • Degree of risk associated
  • Term of the investment
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

With _________ interest, the principal remains fixed throughout the term of the loan. With _______ interest, the principal changes as the accumulated interest from prior periods is added to the principal.

A
  • Simple (<1 year terms)
  • Compound (>1 year terms)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

____________ are member-based cooperatives that offer a full range of financial services.

A

Credit Unions

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Private Lenders mostly use 3 types of funding

A

1) Mortgage Investment Corporations (MIC) - for higher risk borrowers
2) Syndicated Mortgage
3) Their own money

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

A _______________ is when two or more investors participate, directly or indirectly, as lenders in the debt obligation secured by a mortgage.

A

Syndicated Mortgage

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

__________ is the process of paying off an existing mortgage and any other legal claims against the property and establishing a new mortgage secured by the same property

A

Refinancing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Mortgage rates are typically _____ than those of credit cards

A

lower

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Mortgage criteria includes (4)

A

1) Education level
2) Work experience
3) Length of time with current employer
4) Current residence

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

The higher the consumer’s credit score, the _______ the risk they represent to lenders

A

Lower

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

2 ways to determine debt ratios

A

1) Gross debt service ratio
2) Total debt service ratio

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

___________ is the percentage of their gross income needed monthly to cover housing costs

A

Gross Debt Service Ratio (GDS)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

Affordability guidelines state that monthly housing costs should not exceed approximately _____ of a borrower’s gross monthly income

A

30%
(this includes mortgage, property tax, 50% of condo fees, and heating)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

________ is the percentage of their total income needed monthly to cover housing costs and all other debt obligations

A

Total Debt Service Ration (TDS)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

Affordability guidelines recommend that the TDS should not exceed ______ of the borrower’s gross monthly income

A

40%

29
Q

_____ lending also referred to as ‘A’ lending, are loans made to borrowers who have good credit history, and good asset and income position, and the real property pledged as security is of superior quality.

A

Prime

30
Q

_________ lending also referred to as ‘B’ lending, are loans made to borrowers who may nor meet conventional lending guidelines.

A

Near-prime

31
Q

________ lending, also referred to as ‘C’ lending, are loans made to borrowers when they and/or the property pledged as security fail to meet conventional underwriting guidelines.

A

Sub-prime

32
Q

A ________ mortgage is a tentative promise made by a lender to loan a borrower a certain amount of money for the purchase of real estate

A

Pre-approved

33
Q

Property and the title is transferred to the buyer who makes the mortgage payments directly to the seller pursuant to a _____________ Agreement. The seller registers their mortgage interest on title.

A

Vendor Take-Back Mortgage

34
Q

An ________ is used in a situation when the buyer of the property does not have sufficient funds for a down payment or when conventional financing cannot be obtained. To make the sale, the seller supplies the financing and the buyer does not become the owner of the property until the amount has been paid in full. Title to the property remains in the seller’s name until all payments and terms have been fulfilled.

A

Agreement for Sale (AFS)

35
Q

A __________ mortgage can occur when a lender assumes an original first mortgage and provides a new loan that is greater than the original loan amount. In this instance, the borrower receives the difference between the original mortgage and the new mortgage

A

Wraparound

36
Q

A builder who is undertaking a large project, such as a multi-housing development, may prefer to obtain a ______ mortgage to cover the entire project rather than securing a mortgage for each unit that will be built.

A

Blanket

37
Q

__________ is a type of funding advanced in intervals to a developer or builder on behalf of a borrower as work on the construction progresses. Money is released in stages as work advances.

A

Builder’s Loan

38
Q

This financing arrangement is for a short period of time, usually from a few months to a year, and provides financing for a developer or builder who is unable to secure long term financing during the construction period, for a buyer pending the financing of a purchase, and to others in need of short term financing. In essence, it provides the funds needed to bridge the gap until long term financing is obtained.

A

Interim / Bridge Financing

39
Q

_________ is when two or more lenders have equitable interest in the property, so any increased value from the real estate is paid back to the lenders.

A

Participating Mortgage

40
Q

A ___________ is when a lender posts a specific interest rate, but is willing to negotiate a different rate.

A

Discount mortgage

41
Q

A ____________ is a loan that is designed for residential property owners 60+ (this also applies to a spouse) that allows them to convert the equity in their primary residence without selling the property or having to make payments. (up to 40% the value)

A

Reverse Mortgage

42
Q

A ____________ is a loan secured by the lessee’s interest in the leased property.

A

Leasehold Mortgage

43
Q

A ______________ is one that cannot be repaid without prepayment penalties during its term, except as permitted in the mortgage agreement.

A

Closed Mortgage

44
Q

A _______________ is a loan with an interest rate that is fixed for the full term of the mortgage.

A

Fixed Rate Mortgage (FRM)

45
Q

A ____________ is a loan with an interest rate that may change periodically during the term of the mortgage.

A

Variable Rate Mortgage (VRM)

46
Q

The interest rate on an ___________ is usually adjusted at predetermined intervals (e.g. monthly, quarterly, semi-annually) based on an interest rate market review conducted by the lender

A

Adjustable Rate Mortgage (ARM)
- There are fixed rates for a portion of this mortgage

47
Q

Allows the borrower, when not in default, to prepay up to a certain percentage of the outstanding principal balance (e.g. 10% or 20%) on each anniversary date of the mortgage term and an increase of the same percentage on the periodic payments.

A

Percentage Prepayment Option

48
Q

Allows the borrower to pay twice the mortgage payment on the payment date at no cost.

A

Double Up Mortgage Payment Option

49
Q

Consists of blending 13 months of payments over a 12-month period.

A

Accelerated Mortgage Payment Option

50
Q

Allows the borrower to skip up to one payment per calendar year during the mortgage term.

A

Skip Mortgage Payment Option

51
Q

Allows the borrower to switch the payment frequency without any cost.

A

Switch Mortgage Payment Frequency Option

52
Q

Some closed mortgages may include a payout privilege which allows the borrower to pay out the mortgage before the end of the term.

A

Payout Privilege

53
Q

When a closed mortgage is paid out prior to its maturity, the borrower is charged a payout penalty the equivalent of ____ months interest or the interest rate differential (IRD), whichever is greater

A

3

54
Q

A mortgage expandability privilege allows a borrower to increase the principal amount on a first mortgage at the lender’s rate of interest.

A

Mortgage Expandability

55
Q

With a _____________, the borrower receives a percentage of the mortgage in cash, usually at the time of closing, in some cases in return for a higher interest rate than the borrower would have paid without the feature.

A

Cash Back Privilege

56
Q

A Conventional Mortgage is one where the loan does NOT exceed ______% of the appraised value / purchase price (whichever is lower).
A High-Ratio Mortgage is where the loan exceeds _____% of the value.

A

80%

57
Q

3 Mortgage Loan Insurance Providers

A

1) Canada Mortgage and Housing Corp
2) Genworth
3) Canada Guaranty Mortgage Insurance Co

58
Q

The mortgage agreement contains ___________, which are clauses that establish a right or an obligation agreed to by the borrower and the lender.

A

Covenants

59
Q

Borrower Covenants (5)

A

1) Repay the mortgage + interest
2) To pay all taxes
3) To insure the property
4) Maintain property condition
5) Pay any charges on title

60
Q

Borrower Rights (3)

A

1) Quiet possession of property
2) To sell or to add more mortgages
3) To discharge the mortgage (pay off)

61
Q

Lender Covenants (3)

A

1) Discharge mortgage after payment
2) Leave borrower in quiet possession
3) Provide annual mortgage statement

62
Q

Lender Rights (2)

A

1) To assign the mortgage
2) Right to be paid (including interest)

63
Q

The priority of a mortgage is established by the …

A

…date the mortgage is registered against the title of the property

64
Q

_________________ is when a lender agrees to maintain a position of subsequent priority on title.

A

Postponement of a mortgage

65
Q

Foreclosure Proceedings steps (5)

A

1) Borrower defaults
2) Lender sends Demand Letter
3) Lender files Statement of Claim
4) Borrower responds to Statement
5) Lender files for Foreclosure relief
Lender has 3 options
a) Apply for Redemption Order
b) Apply for Order of Sale
c) Apply for Order of Foreclosure

66
Q

Borrower Default may include (4)

A

1) Not paying mortgage
2) Not paying property tax or condo fees
3) Not insuring the property
4) Not protecting it from damage

67
Q

Demand letter requests payment within ______ days

A

7-10

68
Q

Ways that a borrower can respond to a Statement of Claim (5)

A

1) Agree to a Quit Claim
2) File a Demand for Notice
3) File a Statement of Defence
4) Agree to Consent Order for Foreclosure
5) Ignore Statement

Fundamentals of Real Estate (19 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions