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Real Estate > Real Estate Financing > Flashcards

Real Estate Financing Flashcards

1
Q

Considered by lenders

A

DTI
Credit Score
Credit Report

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2
Q

The difference between the amount owed on a property and its current market value

A

equity

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3
Q

mortgage loan will require two instruments

A

Financing instrument and security instrument

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4
Q

a contract with a lender that sets out the terms under which a borrower promises to repay a debt.

A

Promissory note

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5
Q

a negotiable instrument that can be transferred to a third party.

A

Promissory note

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6
Q

charge for the use of money

A

interest

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7
Q

charging an excessive rate of interest is called

A

usury

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8
Q

percentage of a loan amount and are charged by a lender to increase the lender’s yield on its investment

A

Discount points

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9
Q

A home mortgage loan is secured by the borrower’s real property in the process called

A

hypothecation

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10
Q

Mortgage borrower

A

mortgagor

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11
Q

Mortgage lender

A

morgagee

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12
Q

real estate purchased with the borrowed money is used as

A

security

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13
Q

transfers title from the trustor (property owner) to a trustee, who holds it on behalf of a beneficiary (lender).

A

deed of trust

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14
Q

requires the lender to execute a satisfaction (release or discharge) that is recorded to clear title.

A

defeasance clause

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15
Q

executed by the borrower is recorded in the county in which property is located

A

deed of trust

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16
Q

transfers legal title to the trustee but retains equitable title and has the right to possession and use of the mortgaged property.

A

trustor

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17
Q

Property owner

A

trustor

18
Q

beneficiary

A

lender

19
Q

requires the beneficiary to request the trustee to execute and deliver to the trustor a deed of reconveyance (release deed) to return legal title to the trustor.

A

defeasance clause

20
Q

due date of the remaining principal balance and all overdue costs made sooner

A

accelerate

21
Q

allows the beneficiary (lender) to ask the trustee to conduct the trustee’s sale without court action.

A

deed of trust with power of sale

22
Q

enables a sale without court action.

A

mortgage with power of sale

23
Q

may be required to create a reserve fund to ensure that future tax, property insurance, and other payments are made.

A

impound escrow account

24
Q

imposes obligations on lenders and loan servicers to set aside escrow funds for flood insurance on new loans for property in flood-prone areas.

A

National Flood Insurance Reform Act of 1994

25
Q

Priority of mortgages and other liens is

A

determined by the order in which they were recorded.

may be changed by subordination agreement

26
Q

interest-only loan.

A

Straight loan

27
Q

interest rate changes over the term of the loan according to an identified economic indicator

A

Adjustable rate mortgage

28
Q

identified economic indicator

A

index

29
Q

added to the index to determine the rate the borrower will pay

A

margin

30
Q

sets the highest interest rate that can be charged at any point over the life of the loan.

A

rate cap

31
Q

conversion option

A

allows ARM to be converted to a fixed-rate loan.

32
Q

payments of principal are increased each month to pay off the loan more quickly.

A

Growing Rate Mortgage

33
Q

typically is a final loan payment that is at least twice as much as any other payment.

A

balloon payment

34
Q

can be used by someone age 62 or older to receive one or more payments that result in a claim by the lender on the equity in the mortgaged property when the homeowner moves from the property, dies, defaults on one of the loan terms, or sells the property.

A

Reverse Mortgage

35
Q

the judge orders the property sold.

A

judicial foreclosure

36
Q

The equity of redemption refers to the right of a mortgagor in law to redeem his or her property once the debt secured by the mortgage has been discharged.

A

equitable right of redemption

37
Q

when allowed by state law, and if the sale proceeds are less than the amount owed, the mortgagee has a right to what

A

deficiency judgement

38
Q

the lender agrees to accept less than the amount of the remaining indebtedness in order to allow the property to be sold.

A

Short Sale

39
Q

required by a mortgage lender, will protect against loss due to natural disasters, accidents, theft, and fire.

A

Homeowners Insurance

40
Q

database allows insurers to share information on a consumer’s claims history.

A

Comprehensive Loss Underwriting Exchange (CLUE)

41
Q

Federal Emergency Management Agency (FEMA)

A

administers the National Flood Insurance Program

Real Estate (28 decks)

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