Real Estate Financing Pt. 2 Flashcards
Deficiency judgement
Court order stating that the borrower still owes the lender money
Non recourse note
The borrower assumes no personal liability for paying the note (usually in commercial)
Loan assumption
The seller whose loan was assumed still remains liable for the loan and payment of the note unless specifically released by the lender
Subject-to loan
When the new buyer takes the title they are not held liable for the current loan.
Conventional loan
A loan that has no participation from a government agency.
PMI
Private mortgage insurance insures repayment of the top portion of the loan when a borrower defaults. (20%)
FHA
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.
FHA insured loan
Protects lenders against financial loss
Mortgage insurance premium
A monthly prorated mortgage payment that protects the lender
Reverse mortgage
Offered at age 62
Helps them access their equity while still occupying their house
Va guaranteed loan
Guarantees the lender will receive the top portion of the loan regardless of if the borrower defaults
CRV
Certificate of reasonable value
Provides this to the lending institution as a basis for the loan
Release of liability
When a mortgage holder agrees to letting the borrower transfer the responsibility and liability of the loan to another
Substitution of entitlement
Paying the loan in full is not enough to receive the title but the veteran must also rid himself of the property
Escrow account (loans)
The account the borrower pays his insurance and property taxes into through a loan
Prepaid items
The insurance and tax monies deposited at the time of closing
ARM
Adjustable rate mortgage
Type of mortgage where the lender has the right to change or adjust the interest rate
Periodic cap
A limit on the interest rate placed by lenders to regulate (per adjustment)
Loan cap
A limit on the overall interest rate placed by a lender
Negative amortization
The payment does not cover the amount due for interest
Graduated payment mortgage
Payments gradually increase at specified intervals until the payment is sufficient to amortize the loan over the remaining term
Term loan
Requires the buyer to make interest only payments for a period of time
Balloon payment
Any payment that is substantially larger than any previous payment in order to satisfy the remaining principal and interest
Purchase money mortgage
Seller financed loan
