Brainscape's Knowledge GenomeTM

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


See full index

MLO Test > Real Estate Vocabulary > Flashcards

Real Estate Vocabulary Flashcards

1
Q

What is Acceleration Clause

A

The borrower will have to repay all outstanding loans to the lender if the specific requirements are not met

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

Active Contingent

A

The offer is contingent upon the buyer being able to meet certain conditions before the sale be finalized
e.g approval of mortgage, buyer being able to sell

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

Active under Contract

A

Sometimes seller will accept an offer for the home with. contingencies but at the same time would like the house to be active

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

Addendum

A

If the buyer wants to change the contract, they can add an addendum outlining the
Regardless of what is added on the major feature of the contract should not be altered. Help from an Estate lawyer is highly recommended

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

ARM

A

The interest rate changes frequently. Monthly payment on ARM usually increase with time

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

Adjustment Date

A

The date your mortgage starts to accrue interest, even though you have not made single payment. It falls first day of month after the lender has advanced the mortgage funds

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

Amortization

A

Schedule and duration of your mortgage payments that are spread over time. It is usually 15-30 years

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

APR

A

The total amount of interest charged on the loan annually

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

Appraisal

A

Independent estimate of the value of home

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

Appreciation

A

Amount of house value increases over time.

future home value= Present home value x (1+interest rate) time in years?

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

Assessed Value

A

When an owner decides to sell a home, an assessment is usually done to determine how much tax he or she will owe on the property. The assessment is done by assessor who calculates the value of the house by comparing prices with other similar homes

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

Assignment

A

When a seller of a real estate property signs over the obligations and rights of a home to buyer before official closing

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

assumable mortgage

A

buyer has no need to take out a new personal mortgage

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

Blind offer

A

buyer may make an offer on a property that has not been seen. it is risky does work

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Bridge Loan

A

owner will take short term loans against his property to finance the purchase of other real estate property

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

buydown

A

property seller will make payments to lender it will reduce monthly payments and

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

call option

A

This is legal contract that gives one party the right to sell and the other to buy property sometime in the future

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Cash out refinance

A

Also referred to as cash-out refi. is when a homeowner refinances the mortgage for more than it’s value. Buyer needs to have 20% equity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Certificate of eligibility

A

When applying for a VA load, the lender will ask the veteran for proof that he or she has met the minimum service requirements for a VA loan.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Certificate of reasonable value

A

This certificate is issued by dept of VA. Any veteran who applies for a loan needs to have this certificate. The CRV helps establish the maximum value of the property so that the size of the loan can be determined

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Chain of titles

A

It documents the past owners of the property, starting with the very first owner

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Clear Title

A

Good Title or Free title. Only reveals that there is no question of legal ownership of the property, including bad surveys or building code violations.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Closing

A

End stage of a real estate deal. On the closing date, the property and title are then legally transferred to the buyer.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Closing Cost

A

Usually 2% to 5% of the total price of the home. Fees charged by the lawyer, lender, insurance, title, HOA, real estate agent and other related companies. Average buyer pays $3700 in closing costs. This fee is paid on the day of closing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

Commission

A

Real estate agents receives 5 to 6% bases on the home sale price. This is usually divided between buyer and seller agents. Money is paid at closing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

Contingent vs pending

A

A contingent offer can still be seen under active listings, whereas a pending offer will no longer be on the listings

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

covenants, conditions and restrictions (CC&Rs)

A

These are the rules on property that are run by the HOA, developer etc

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

Conventional Mortgage

A

A loan that is usually not insured or guaranteed by the federal government. Borrowers make large payments and not required to have mortgage insurance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

Conventional sale

A

In general, a conventional sale is when the property has no mortgage remaining, or the owner owes very little mortgage.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

Convertible ARM

A

Convertible adjustable rate mortgagees permit the buyer to take advantage of low interest rates by obtaining a loan at a “teasers’ interest rates. While the monthly mortgage payments remain the same, the interest rates, the interest rates do fluctuate every six months. However, the borrower does have the choice of converting the ARM to a fixed rate mortgage, but this switch also comes with fees.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

Cost of funds Index (COFI)

A

This is the average of all the regional interest expenses acquired by the lender or the financial institution. The COFI is then utilized to determine the variable rate loans

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

DTI

A

Debt to Income ratio is a number utilized by the lenders and financial institutions to determine affordability by the buyer. DTI is calculated by total debt expenses plus the monthly housing payment divided by the gross monthly income times 100.
Lenders prefer to have buyers spend less than 28% of total income on housing and less than 36% on debt payments.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

Deed

A

It is a legally written document that transfers the title from the seller to the buyer. The deed also goes by another name: “Vehicle of the property interest transder”

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

Deed in lieu of foreclosure

A

This is a document that transfers the title from homeowner to the lender/bank.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

Default

A

Is said to occur when an owner defaults on the loan, meaning the loan agreed to be in the contract is not paid. Default is said to occur when the homeowner has not made a loan payment in 90 days or more

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
36
Q

Delinquency

A

Is said to occur when the owner has not made a scheduled payment. If the payment is delayed for more than 30 days, the lender may initiate collections or even foreclosure proceedings.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
37
Q

Discount Points

A

Mortgage points, these are the feeds that home buyers may sometimes pay to the bank during closing. In return, the owner gets low-interest rates which can significantly reduce the monthly mortgage payments.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
38
Q

Down payment

A

Sum of money that a homebuyer pays at the time of closing. Most mortgages required a 20% down payment. A confirming loan may accept a 5% and FHA loan will accept a 3.5% down payments

39
Q

Due Diligence

A

This is the time period available for the buyer to examine the property.

40
Q

Due on sale

A

Acceleration Clause It is a clause in the contract that protects lenders against below market interest rates. This provision in the contract requires the seller of real estate to repay the full mortgage when the property is sold in the future.

41
Q

Earnest money deposit

A

Small deposit that a homebuyer makes when entering into a contract with the seller. The deposit is 1-5%
Deposit is deducted from the closing and total down payment costs. This money is held in ian escrow

42
Q

Easement

A

Givers a person the legal right to use another individuals’ property or land while still retaining the title in the sam owner

43
Q

Eminent domain

A

It gives a person the legal right to use another individual’s property or land while still retaining title in the name of the owner

44
Q

Encroachment

A

Permits the govt the right to use or occupy a private property for public purposes. It is legal only when the govt compensates the property owner for the land or the property

45
Q

Encumbrance

A

In real estate it refers any claim against the property that limits its transfers or use, including an easement or property tax lien

46
Q

Equal Credit Opportunity ACT (ECOA)

A

Enacted in 1974. Unlawful for lenders and creditors to discriminate against applicants based on color, religion, sex, martial status, national origin or age just because they were recipients of public assistance.

47
Q

Equity

A

Equity=current market value - mortgage balance

48
Q

Escrow

A

Involves third party that will hold the funds during transaction. When the transaction is complete, thr third party will release the funds to the seller

49
Q

Examination of title

A

Allows one to review all the public records linked to the property.

50
Q

Exclusive Listing

A

This is a tactic sometimes utilized to encourage the agent to sell the property fast usually within a specified time.

51
Q

Fair Credit Reporting Act (FCRA)

A

Passed in 1970 to ensure accuracy, fairness and privacy of personal data contained in the data bank by the credit reporting agencies

52
Q

Fair Market Value

A

Property’s value in an open and free market under the condition that the seller and buyer are aware of the value

53
Q

Fee Simple

A

In simple terms, it means that the owner has indefinite rights to the property and that the rights may inherited or transferred when the owner wants. The fee simple is most frequently associated with condominiums, single family homes and town homes that are purchased under some conditions, covenants and restrictions.

54
Q

FHA Mortgage

A

FHA not only insures the loans but offers several benefits, including a low down payment (3.5% of the total home value), Easy credit qualifying, and low closing costs. Lenders feel confident about giving FHA loands

55
Q

Fixed rate mortgage

A

This is common type of loan that comes with fixed rate

56
Q

Foreclosure

A

When homeowner does not make the regular monthly payments for more than 3 months.

57
Q

Hard Money Loan

A

These loans financially based on property and not on the credit score. Large downpayments and high interest rates and have short schedule. These loans are often small

58
Q

HECM home equity conversion mortgage

A

it assists homeowners in with drawing equity on their home via a line of credit, a fixed monthly

59
Q

HELOC HOME EQUITY LINE OF CREDIT

A

it provides owners with a revolving credit line that cab used to pay for large expenses

60
Q

inspection contingency

A

allows the buyer to do inspectio

61
Q

Judicial Foreclosure

A

It requires that all foreclosed home first go through the legal system to confirm owner has defaulted before the home can be placed before auction

62
Q

Jumbo loan

A

loan amt that exceeds the cap limit set by govt agencies like fannie mae and freddie mac

loan is manually written

63
Q

Lease option

A

offers people who rent an option to own real estate.

64
Q

Lien

A

A lien can prevent the owner selling the property until debt is resolved

65
Q

Life Cap

A

When a buyer obtains a mortgage on an adjustable rate, there is cap on the maximum amount of interest rate over the lifetime of the loan. Absolute Interest rate, or interest rate ceiling

66
Q

Loan Contingency

A

An Addendum or a clause in the contract that permits the buyer to back out of the deal and get the deposit back in case he or she is unable to secure the loan. There is usually a time period for the loan contingency clause to be valid

67
Q

Loan Origination

A

Buyer submits an application for a loan from a private lender or financial institution
Fee is 0.5 to 1%

68
Q

Loan Servicing

A

Describes the admin aspects of maintaining the loan from time the loan was given to the time when it is fully paid. The loan servicing program includes the keeping records of all payments, and balances. Sending monthly borrower statements, paying taxes and insurance

69
Q

LTV

A

Loan Balance divided by the value of the home * 100
It reflects how much the owner has borrowed from a lender as a percentage of the appraised value of the home. The higher the LTV ratio, the greater the risk

70
Q

Lock in period

A

The time period during which the borrower is unable to repay the loan in full without facing monetary penalty by the lender

71
Q

Mortgage Broker

A

An individual who often acts as middleman between the borrower and the lending institutions. The broker compares mortgages from different lenders and tries to give the borrower the best deal in town

72
Q

Mortgage Insurance

A

When a borrower purchases a home with value less than 20% of the down payment or is the recipient of a USDA and FHA loan, the individual will have to purchase mortgage insurance.

73
Q

Mortgage pre approval letter

A

When applying for a loan, it is important to get a pre approval letter from the lender. This letter usually reveals the type of loan, terms, loan amt the buyer has qualified for. Lender checks credit history, cash on hand, debt to income ratio.

74
Q

MLS

A

collection of 700 regional databases

75
Q

NHD

A

Natural hazards disclosure state required report that discloses if the property is located in a location where there is higher risk of natural hazards or disasters. Fee paid by the seller.

76
Q

No cost mortgage

A

Type of refinancing where the lender pays the loan settlement costs for the borrower. In exchange the borrower will have a loan with higher interest rates. In turn, the mortgage lender will sell the loan to a secondary market for a much higher price due to the high interest rate.

77
Q

Note rate

A

This is the interest rate documented on the mortgage document. It is also referred as face interest rate or nominal rate.

78
Q

Original Principal Balance

A

This is the amount the buyer owes on the mortgage before even making the first payment

79
Q

Origination Fee

A

The cost of processing the loan application.

80
Q

Per Diem

A

These are the fees that are charged by the day if the loan completion is not approved on the scheduled day. On closing the lender will demand this payment.

81
Q

PITI

A

Principal
Interest
Taxes
Insurance
PITI costs are calculated and compared to the borrower’s monthly gross income prior to approving a loan.

In general, the borrower’s PITI costs should be less than 28% of their gross monthly income

82
Q

PUD

A

Planned Unit Development A housing complex made up of town homes, single family residences, condominiums as well as commercial units.

It may offer common areas and amenities that are owned by HOA.

83
Q

Pre approval

A

Lender will do a credit check, verify all information, do the debt to income ration and approve the buyer for a specified amount of loan for up to 90 days.
It is more complete than a pre-qualified letter

84
Q

Pre-qualification

A

It is slightly different from pre-approval. It just gives a rough estimate of how much the potential buyer can afford to buy a home. Getting pre-qualified is a simple matter based solely on what the buyer tells the lender. It is not based on verified information or proof

85
Q

Prime Interest Rate

A

This is generally a favored interest rate that is given to the lender’s loyal and reliable customers. It is usually the best available loan rate that is usually three points above the federal fund rate. The rate which banks charge each other for overnight loans.

86
Q

Negative Amortization

A

Amortization is the process of paying off the loan with regular payments so that each month the amount of the loan decreases.

Negative occurs when you pay less than the scheduled monthly payments and the amount you owe tends to increase.

86
Q

Quitclaim deed

A

Document that transfers ownership of the home from one person to another individual.

86
Q

Mortgage Banker

A

Who works for a financial institutions or private lender to provide funds to borrower.
The mortgage banker is only able to obtain funds from a specific institution and is also responsible for the mortgage process including overseeing the application, evaluating the property and performing credit check on the borrower

87
Q

RESPA

A

Real estate Settlement Procedures Act. It requires lenders to provide the disclosures to borrowers of all real estate transactions, consumer protection laws and settlement services. The key goal of RESPA are to regulate the costs of settlements, limit the user of escrow accounts and ban practices that involve kick backs

88
Q

Right of ingress or egress.

A

The right to ingress means that the person has the right to enter a property, and right to egress means that person has the legal right to exit the property. These terms are usually used in an easement or rental scenario where a tenant or individual has been granted access to a private road, shared drive way.

89
Q

Right of surviorship

A

This is process used when there is joint ownership of tenancy or a property. It ensures that the surviving owner will automatically receive the deceased owner’s share of the property and will now become the sole property owner.

90
Q

Sale-leaseback

A

This occurs when the buyer closes on a property and then decided to lease the tenancy back to the seller. When the seller is unable to move out of the property after the closing date. Buyer becomes a temporary landlord and will charge the seller a rental fee for every day he or she remains in the home

91
Q

Transfer Tax

A

This is transaction fee for the transfer of a property’t title. The transfer tax is imposed by the local county and state where the transaction takes place. The fee based on the property’s classification and value. In most cases, seller will pay the real estate transfer tax unless it is stated otherwise in the contract.

MLO Test (34 decks)

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