Brainscape's Knowledge GenomeTM

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


See full index

Real Estate > Real Estate Financing > Flashcards

Real Estate Financing Flashcards

1
Q

Mortgagor

A

Lender

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

Mortgaee

A

borrower; has conditional title to the lender in order to secure payment

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

Second Mortgage Market

A

loans being sold off to investors

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

List the 3 Major Loan Buyers

A
  1. Fannie Mae - Federal National Mortgage Association
  2. Freddie Mac - Federal Home Loan Mortgage Corporation
  3. Ginnie Mae - Government National Mortgage Association
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Ginnie Mae (Government National Mortgage Association

A

Founded 1968

Specializes in low income loan

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

Fannie Mae (Federal National Mortgage Association)

A

Founded 1938
Focus: conventional, FHA and VA loans
Founded by US government to inject liquidity into the credit market, making loans more readily available

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

Freddie Mac (Federal Home Loan Association)

A

Founded in 1970
Conventional, FHA and VA loans
Innovated securitization of mortgages

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

Amortization

A

payment of debt in equal installment

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

Fully Amortized loans (Direct Reduction loans)

A

Loans that are completely paid off when the last payment is made
Interest and principal payments as well as insurance and taxes due
Assume 12 days in a year
Amount going to interest vs principal is recalculated each month

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

PITI

A

What is included in the amortization of loans payments
Principal
Interest
Taxes
Insurance
-Assumes only 12 days in a year (first of the month)

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

Amortization Tables

A

Way to calculate mortgage payments
pg 70
Formula: (loan / 1000) * PI = Monthly Payment

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

Formula to calculate amortized loans

A

(Loan/1000) x PI = Monthly

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

Second Mortgages (junior liens)

A

Paid second not the primary mortgage
Used to pay a portion of the down payment for the first mortgage
OR
Renovations

In event of foreclosure, the first mortgagee has the first claim on the property

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

Balloon Mortgages

A

a loan with an amortization period that is longer than its payment period
(e.g. 10-year loan payments are calculated on a 30-year amortization schedule)

  • Making fewer principal payments means unpaid principal need to be discharged with the final payment
  • Loan is refinanced
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Straight loans

A
  • interest-only loans
  • principal paid in a lump sum on the last payment
  • Common in home flipping - investor takes a short term loan and paid back
    when sold
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Simple Interest loans

A

non-compounding loans
Interest calculated daily
example: short term investment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Purchase Money Mortgages

A

seller financing or seller carry-back loans

  • The seller acts as a bank for the buyer; buyer makes mortgage payments
    directly to buyer
  • Buyer gives the seller a note and a mortgage
18
Q

Wraparound Mortgages

A

Seller hasn’t finished paying off debt but wants to set up seller financing
Wraps the seller financing around seller’s existing debt

Buyer forwards the money to sellers bank to pay off their own debt to the bank; typically seller charges more to make a profit

If the seller does not forward to bank watch out b/c this could mean foreclosure

  • due-on sale clause prohibits wraparound mortgages
19
Q

Package Loans

A

covers real and personal property

if you default on this mortgage both personal and real property are in foreclosure

20
Q

Chattel Mortgage

A

Covers personal property only, example being businesses

21
Q

Home Equity Line of Credit

A

Give borrower a line of credit to the borrower against the equity in their home aka a junior lien,
aka what Joe Envoy told me

22
Q

Reverse-Annuity Mortgage

A
  • homeowners of 62+ access equity they have on their home
  • bank makes payments to borrowers against the equity in their home
  • loan plus interest repaid when homeowner passes away or sells home
23
Q

Fixed Rate Mortgage

A

the interest rate that is locked in when the loan originates does not change over the lifetime of loan

24
Q

Adjustable Rate Mortgage (ARM)

A

the interest rate that adjusts, based on prime interest rate or lowest interest rate at the bank

25
Q

Graduated Payment Mortgage

A

loan aimed at home buyers with predictable rising incomes

at first, the loan is affordable and increased over time as income increases

26
Q

Growing Equity Mortgage (GEM)

A

A loan where extra payments going towards principal

27
Q

Participation Mortgage

A

lender participates as an equity partner in a development project

28
Q

Shared Appreciations Mortgage (SAM)

A

an investor makes the down payment for the buyer in exchange for a share of the property equity or appreciation value

29
Q

Blanket Mortgage

A

A loan that covers several pieces of land

Typically used by real estate developers include partial release clause

30
Q

Partial Release Clause

A

Included in a blanket Mortgage to allow partial payment of developers mortgage every time an individual property is sold and for the property to be released from the mortgage

31
Q

Bridge loans

A

A short term loan designed to bridge the borrower over some gap in cash flow e.g. shortfall in a construction between stages of a project

32
Q

Swing loans

A

Allows a HOMEBUYER to borrow against a new home they’re purchasing to carry two mortgages while selling home

33
Q

non recourse loan

A

the borrower is not responsible for loan deficiency in foreclosure, no personal guarantee

34
Q

Paycap

A

prevents loan payments from exceeding a certain dollar amount

35
Q

Buy Down or Pledged Account Mortgages (PAMs)

A

make loan payments affordable, with high interest rates

36
Q

Take over Mortgages

A

like subletting the mortgage

if no due on sale clause buyer can take over mortgage by paying seller their equity and receive a dead

37
Q

Subject to

A

Method of taking over seller’s lien - original morgagor and new owner are responsible for the loan

38
Q

Assumption of

A

Method of taking over the mortgage,

both new owner and seller are responsible or loan

39
Q

Novation

A

The seller’s note is canceled and a new noted is written between the lender and the buyer

40
Q

Helping Families Save Their Homes Act (part of Truth and Lending Act)

A

Mortgagor must be informed of the sale of their mortgage to another bank

41
Q

Participation Loan

A

A loan when a lender participates as an equity partner

42
Q

Short Sale

A

sale for less than the seller owes on their loan

Real Estate (20 decks)

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