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real estate > Real estate Financing > Flashcards

Real estate Financing Flashcards

1
Q

Portfolio Loans

A

loans that a bank keeps and services in house

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2
Q

Secondary Mortgage Market

A

where banks sell loans to investors

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3
Q

Mortgagor forwards future mortgage payments to new owner

A

-mortgagor doesnt need to consent to the sale of their loan
Helping Familie Save Their Homes Act

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4
Q

Certificate of no defense/Estoppel certificate

A

all the terms of the loan remain the same with the new servicer

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5
Q

Fully Amortized Loans Vocab

A
  • Amortization= payment or debt in equal payments over loan term
  • Debt Service = payment of both principal and interest
  • Principal = amount borrowed (debt)
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6
Q

Fully Amortized Loans

A

loans that are completely paid off when last payment is made
- also known as Direct Reduction Loans
- Debt service pays both principal and interest

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7
Q

PITI Payment

A

Principal Interest Taxes and Insurance (Home Owners Insurance)

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8
Q

How do fully amortized loans work?

A

Every month a portion goes to principal and interest but the payment remains the same

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9
Q

Amount going toward principal & interest changes over the life of the loan

A
  • recalculated monthly
  • only 12 days in a calender year for calculation
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10
Q

With each payment made, amount of money going toward principal increases, while the amount going toward increase decreases

A

Final Payoff = discharge document that shows that the lender has no claims to the collaterl for the debt because it was paid in full

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11
Q

Principal payments are always residual

A

Difference between total payment & interest due

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12
Q

Math using the amortization table

Formula: (loan amount/1000) x PI = monthly payment

A

to calculate the payments on an amortized loan the formula is the first half of PITI. payments on a $200,000 loan at 5% interests amortized over 30 years would have a PI of $5.37 and be calculated as (200,000/1000)*5.37PI = $1,074

the payments of Principle, Interest, Taxes, and Insurance

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13
Q

a loan can either be a fixed rate or adjustable rate

fixed rate

A

interest rate doesn’t change over the life of the loan

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14
Q

Adjustable Rate

A

Interest rate is usually lower in the beginning
- Teaser or discounted rate
* Interest rate adjusts based on prime rate
* payment caps
- if increase is higher than cap, bank will carry it over to next rate increase

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15
Q

Balloon Loans

A
  • Amortization period is longer than pay period
  • Balloon = unpaid principal at the end of the term
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16
Q

Straight & Simple Interest Loans

A
  • interest only loans
  • non compounding debt calculated daily
  • Principal paid in one lump sum at the end of term
17
Q

Second Mortgages

A

Junior Liens
* Equity Line, Line of Credit
* Borrower is given a line of credit against their equity

18
Q

Graduated Payment Loans

Doctor loans

A
  • Monthly payment is lower in the beginning and increases as the homeowner makes more money
  • Used for homebuyers with predictably rising incomes (doctors)
  • Negative amortization of interest

^not paying in interest it gets added on to loan

19
Q

Growing Equity Mortgage

A
  • Extra payments are made toward the principal
  • Homeowner will pay off the loan faster
    (Payments increase over life of loan as a predetermined schedule)
20
Q

Reverse Annuity Mortgage

A
  • Bank makes payment to the homeowner against the equity in their home
  • must be 62 y/o to use
  • Loan plus interest must be repaid when home is sold or they pass

Loan must be paid off wihin 12 months of homeowner death

21
Q

Purchase Money Mortgage

A
  • Seller= Mortgagee, Borrower= Mortgagor
  • Seller acts the bank or lender
  • Buyer gives the seller a note and a mortgage
22
Q

Wraparound Mortgage

Seller financing

A
  • Seller “wraps” their existing debt around the borrower new loan
  • Helps seller pay off their existing debt while making extra money from seller financing arrangement
23
Q

Construction Loans

A
  • Borrower recieves funds in draws (on stages of construction)
  • Loan typically gets replaced once construction is complete

Usually replaced by a take out loan

24
Q

Package Mortgage

A

Covers real and personal property

Auto Body shop

25
Q

Non-Recourse Loan

A
  • Borrower not personallt liable for on loan deficiency after foreclosure
  • Only the property is the security for the loan
26
Q

Chattel Mortgage

Fancy word for personal property

A

Secured by personal property only

Mobile

purchase of large equiptment

27
Q

Blanket Mortgage

A
  • Used for development of subdivisions where there are multiple lots
  • Includes Partial Release Clause

Each parcel would be released from original collateral as they are sold

28
Q

Bridge Loans or Swing Loans

A

Short term Loans

Designed to bridge the borrower over some gap in cash flow

29
Q

Participation Mortgage

A

Lender participates as an equity partner in a devolpment

30
Q

Shared Appreciation Mortgage

A
  • Investor makes a dowpayment for a buyer in exchange for share in property equity
31
Q

PAM

Buy Down or Pledge Account Mortgage

A
  • Often seen in markets where interest rates are high
  • Subsidy for certain numbers of years to make monthly payments affordable
    **if seller subsidizes = buy down
    **If buyer subsidizes = pledge account

Buy down the rate foor a short time

32
Q

Take over Mortgages

sellercan not have a DUE on Sale clause

A
  • Subletting of mortgage
  • Buyer takes over seller’s debt & original loan stays in place
  • Buyer would pay seller their equity & recieve a deed along with right to redeem title after paying off loan
  • FHA loans that originates prior to 1989

Assumable

33
Q

Subject to

A
  • Only the Original Mortgagor is legally responsible for loan
  • is liable for any deficiantcy after foreclosure

Best for Buyer

34
Q

Assumption of

A
  • Both the original mortgagor and new owner are responsible
  • Jointly responsible
35
Q

Novation

A
  • Seller’s Note is cancelled and new note is created between the new buyer and the bank
  • only buyer is responsible

Best for seller

real estate (7 decks)

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