Real Estate Financing Pt. 2

Question 1

Deficiency judgement

Answer 1

Court order stating that the borrower still owes the lender money

Question 2

Non recourse note

Answer 2

The borrower assumes no personal liability for paying the note (usually in commercial)

Question 3

Loan assumption

Answer 3

The seller whose loan was assumed still remains liable for the loan and payment of the note unless specifically released by the lender

Question 4

Subject-to loan

Answer 4

When the new buyer takes the title they are not held liable for the current loan.

Question 5

Conventional loan

Answer 5

A loan that has no participation from a government agency.

Question 6

PMI

Answer 6

Private mortgage insurance insures repayment of the top portion of the loan when a borrower defaults. (20%)

Question 7

FHA

Answer 7

Federal housing administration was created to help make home ownership available to more, improve housing construction, and provide a more effect loan system for homes.

Question 8

FHA insured loan

Answer 8

Protects lenders against financial loss

Question 9

Mortgage insurance premium

Answer 9

A monthly prorated mortgage payment that protects the lender

Question 10

Reverse mortgage

Answer 10

Offered at age 62

Helps them access their equity while still occupying their house

Question 11

Va guaranteed loan

Answer 11

Guarantees the lender will receive the top portion of the loan regardless of if the borrower defaults

Question 12

CRV

Answer 12

Certificate of reasonable value

Provides this to the lending institution as a basis for the loan

Question 13

Release of liability

Answer 13

When a mortgage holder agrees to letting the borrower transfer the responsibility and liability of the loan to another

Question 14

Substitution of entitlement

Answer 14

Paying the loan in full is not enough to receive the title but the veteran must also rid himself of the property

Question 15

Escrow account (loans)

Answer 15

The account the borrower pays his insurance and property taxes into through a loan

Question 16

Prepaid items

Answer 16

The insurance and tax monies deposited at the time of closing

Question 17

ARM

Answer 17

Adjustable rate mortgage

Type of mortgage where the lender has the right to change or adjust the interest rate

Question 18

Periodic cap

Answer 18

A limit on the interest rate placed by lenders to regulate (per adjustment)

Question 19

Loan cap

Answer 19

A limit on the overall interest rate placed by a lender

Question 20

Negative amortization

Answer 20

The payment does not cover the amount due for interest

Question 21

Graduated payment mortgage

Answer 21

Payments gradually increase at specified intervals until the payment is sufficient to amortize the loan over the remaining term

Question 22

Term loan

Answer 22

Requires the buyer to make interest only payments for a period of time

Question 23

Balloon payment

Answer 23

Any payment that is substantially larger than any previous payment in order to satisfy the remaining principal and interest

Question 24

Purchase money mortgage

Answer 24

Seller financed loan

Question 25

Open-end mortgage

Answer 25

One that can be refinanced without rewriting the mortgage

Question 26

Home equity mortgages

Answer 26

Loan that uses the equity as collateral