Real Estate Loans

Question 1

Types of Loans

Answer 1

Conventional = 30 year fixed

Fixed v ajusted interest rates

Amortizing fully v a bullet loan (balloon loan)

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Question 2

Different Lenders

Answer 2

Mortgage bankers - initiate residential loans and then sell the loan in about a month

Mortgage brokers help find a lender

Commercial Bankes

Credit unions

Commercial loans are often made by life insurance companies

Question 3

What is acceleration

Answer 3

the right of the lender to call the entire amount due upon default

Question 4

What is a Due on Sale Clause

Answer 4

if borrower sells property, the amount left on the loan is due on the same day

Question 5

Issues of Prepayment

Answer 5

Not a common law right

ussies arise when refinancing

Question 6

Recourse v Non-recourse

Answer 6

recourse - (usually residential) - borrower is personally liable for the payment of the loan

non-recourse - lender can only take over the building, not the amount left on the loana

Question 7

Rate Locks

Answer 7

pay more to have a locked interest rate for duration of laon

Question 8

Qualifications

Answer 8

Prequalification - lowest level - general idea of what you could qualify for

Pre Approval - complete application and is told conditions toget the loan

Loan Commitment - promise by lender to issue that loan assuming conditions have been satisfied

Question 9

Influencers of liklihood of approval

Answer 9

Capacity - debt to income ratio

Credit

COllateral - ratio of laon to the value (appraisal) of the particular real estate