Terms 2 Flashcards
When real estate is financed with terms or financing concessions other than those typical for conventional loans
Alternative financing
Loans in rural areas for households at or below 80% of the adjusted median income level
Agricultural loans
When a loan balance decreases because of periodic installments that pay principal and interest.
Amortization
Relationship between the cost of borrowing and the total amount financed, represented as a percentage.
Annual percentage rate (APR)
When points are paid to reduce the buyers interest rate
Buydowns
When points are paid to a lender to reduce the interest rate and loan payments for the entire life of the loan.
Permanent buydowns
For home sport with FHA/HUD guarantees, a ______ _______Form is used to document and appraiser’s estimate of the value of the property to be purchased.
Conditional commitment
Financial institutions that are a type of cooperative organization we members share something in common i.e. an employer, pool their deposits together, and pay members better interest rates, and loan money to fellow members.
Credit unions
Paying 1% of the loan amount to reduce the borrowers monthly payments or interest rate.
Discount points
A contract between a buyer client and a mortgage broker that creates an agency relationship and indicates the fee the client will pay for the broker services.
Fee agreement
Financial institutions that specialize in making high-risk loans and higher interest rates.
(sources of secondary mortgages and home-equity loans)
Finance companies
A statistical report that is a generally reliable indicator of the approximate change in the cost of money.
Index
This is a charge for the use of money.
Interest
A limit placed on the number of percentage points and interest-rate can be increased during the term of the loan
Interest rate cap
Loans that exceed the maximum loan that Fannie Mae/Freddie Mac will buy (currently $300,700 on a single-family home) making them nonconforming loans.
Jumbo loans
The cash rebate paid to a mortgage broker based on selling an interest rate above the rate that the borrower qualifies for. Also known as a Yield Spread Premium (YSP)
Lender’s rebate
When the lender sells a mortgage loan it to the secondary mortgage market.
Loan assignment
A buydown plan where the interest reduction rate/the payment is constant throughout The buydown period.
Level payment
A general term to describe a mortgage that can be prepaid at any time without penalty
Open mortgage
State-chartered banks, mostly in North East US, owned by depositors and operated for their benefit. (Usually a large portion of their assets are mortgages.)
Mutual savings banks
Financial institutions that make real estate loans that they keep and service in house instead of selling to the secondary markets
Portfolio lenders
This is the base amount of a loan.
Principal
A limit on the amount of mortgage payment increase that can occur within adjustable rate mortgage.
Payment Cap
The process of collecting loan payments, keeping records, and handing defaults
Servicing
Loans with more risks and higher interest rates over by some lenders to borrowers with questionable credit histories
Subprime loans
A bond purchases by an employer to cover employees are trusted with sums of money who are responsible for protecting valuable assets.
Surety bond
The process a lender goes through to determine if a borrower or property can qualify for a loan.
Underwriting
Even though the payment stays the same for the life of the loan, the amount applied to principle and amount applied interest are just that each month. If all payments are made on time, The loan will be paid off in full with the last scheduled payment.
Liquidating
The total payments over the life of the loan will pay off the entire balance of principal and interest due at the end of the term.
Fully amortized loan
Private mortgage insurance (PMI) is required for:
90% conventional loans
A contract clause that gives the lender certain stated rights when there’s a transfer of ownership in the property. Upon sale of, or even a transfer of, significant interest in the property, the lender will have the right to accelerate the debt, change the interest-rate, or charge a hefty assumption fee.
Alienation clause
Paying discount points to decrease the borrower’s interest rate
Buydown
The difference between the index value and the interest rate charged to the borrower. In essence this is the lenders gross profit that must also be used to cover the lenders expenses.
Margin
Intervals at which a borrower’s interest-rate is adjusted.
Rate adjustment Period
This is the difference between the index value and the interest rate charged to the borrower
Margin
