Unit 13 Key Terms Flashcards
adjustable-rate-mortgage (ARM)
A financing technique in which the lender can raise or lower the interest rate according to a set index.
amortized mortgage
A loan characterized by payment of a debt by regular installment payments.
annual percentage rate (APR)
Total yearly cost of credit.
balloon payment
A single, large payment made at maturity of a partially amortized mortgage to pay off the debt in full.
biweekly mortgage
A mortgage loan amortized the same way as other loans with monthly payments, except that the borrower makes a payment every two weeks.
Closing Disclosure
A form that must be provided to the borrower at least three business days before closing; replace the Settlement Statement (HUD-1).
conforming loan
A standardizes conventional loan written on uniform documents that meets the purchase requirements of Fannie Mae and Freddie Mac.
conventional loan
A real estate loan that is neither FHA-insured or VA-guaranteed.
demand deposit
Checking accounts; payable on demand by holder.
disintermediation
A disengagement process when depositors withdraw money from savings for direct investment in stocks, money market funds, and other securities.
entitlement
That portion of a VA-guaranteed loan that protects the lender if the borrower defaults.
home equity loan
A mortgage secured by a personal residence. It provides a line of credit available for draws when needed by the homeowner. It is sometimes used as a home improvement loan.
housing expense ratio (HER)
A measurement of the borrower’s expected monthly housing expense (PITI +PMI) divided by monthly gross income.
index
The variable component that is added to the margin to calculate the interest rate in an adjustable-rate mortgage.
intermediation
The process whereby financial middlemen consolidate many small savings accounts belonging to individual depositors and invest those funds in large, diversified projects.
level-payment plan
A method for amortizing a mortgage whereby the borrower pays the same amount each month.
lifetime cap
Limits the total amount the interest rate may increase over the life of an adjustable-rate mortgage loan.
Loan Estimate
A disclosure form with good-faith estimates of credit costs and transactions terms that must be given to the borrower no later than the third business day after receiving the loan application.
margin
The fixed component that is added to the index to calculate the interest rate in an adjustable rate mortgage.
mortgage fraud
A crime in which the intent is to materially misrepresent or omit information on a mortgage loan application to obtain a loan or to obtain a larger loan than would have not been obtained had the lender or borrower known the truth.
mortgage insurance premium (MIP)
Fee paid by FHA borrowers to obtain a loan (up-front and annual).
mortgage lender
A business entity that originates, sells, and then services mortgage loans. Mortgage lenders are not depository institutions. They originate loans and then package the loans together and sell the entire package.
mortgage loan originator (MLO)
One who finds a lender for a potential borrower, and vice versa.
negative amortization
A financing arrangement whereby monthly mortgage payments are less than required to pay both interest and principal. The unpaid amount is added to the loan balance.
nonconforming loan
A residential mortgage loan that exceed the loan amount acceptable for sale to Fannie Mae.
nonconventional loan
A mortgage loan that is insured or guaranteed by the federal government (FHA or VA).
package mortgage
A loan covering both real and personal property.
partially amortized mortgage
The buyer makes regular payments smaller than what is required to completely pay off the loan (payments do not fully amortize the loan) resulting in a larger balloon payment to pay off the remaining amount due.
payment cap
Limits the amount the monthly payments of an adjustable-rate loan can increase during any adjustment.
periodic cap
Limits the amount the interest rate of an adjustable-rate loan may increase at any one time (usually a year).
primary mortgage market
A source for the purchase of a mortgage loan by a borrower.
principal
The party employing the services of a real estate broker; amount of money borrowed in a mortgage loan, excluding interest and other charges.
private mortgage insurance (PMI)
Needed to insure all of the mortgage representing more than 80% of appraised value or purchase price.
purchase money mortgage (PMM)
Any new mortgage taken as part of the purchase price of real property by the seller.
reverse mortgage
A form of mortgage that enables elderly homeowners to borrow against the equity in their homes so they can receive monthly payments needed to help meet living expenses.
secondary mortgage market
A source for the purchase and sale of existing mortgages.
teaser rate
A below-market interest rate usually offered for the first year on some adjustable-rate mortgages.
total obligations ration (TOR)
A measure of a borrower’s total monthly installment debt divided by monthly gross income.
triggering terms
The Truth in Lending Act requires creditors to disclose certain information if certain credit terms, called triggering terms, are included in the advertisement. Triggering terms include the amount or percentage of down payment, number of payments, period (term) of repayment, amount of any payment, and the amount of any finance charges.
up-front mortgage insurance premium (UFMIP)
A one-time mortgage insurance premium on FHA mortgage loans that is paid at closing.
A financing technique in which the lender can raise or lower the interest rate according to a set index.
adjustable-rate-mortgage (ARM)
A loan characterized by payment of a debt by regular installment payments.
amortized mortgage
Total yearly cost of credit.
annual percentage rate (APR)
A single, large payment made at maturity of a partially amortized mortgage to pay off the debt in full.
balloon payment
A mortgage loan amortized the same way as other loans with monthly payments, except that the borrower makes a payment every two weeks.
biweekly mortgage
A form that must be provided to the borrower at least three business days before closing; replace the Settlement Statement (HUD-1).
Closing Disclosure
A standardizes conventional loan written on uniform documents that meets the purchase requirements of Fannie Mae and Freddie Mac.
conforming loan
A real estate loan that is neither FHA-insured or VA-guaranteed.
conventional loan
Checking accounts; payable on demand by holder.
demand deposit
A disengagement process when depositors withdraw money from savings for direct investment in stocks, money market funds, and other securities.
disintermediation
That portion of a VA-guaranteed loan that protects the lender if the borrower defaults.
entitlement
A mortgage secured by a personal residence. It provides a line of credit available for draws when needed by the homeowner. It is sometimes used as a home improvement loan.
home equity loan
A measurement of the borrower’s expected monthly housing expense (PITI +PMI) divided by monthly gross income.
housing expense ratio (HER)
The variable component that is added to the margin to calculate the interest rate in an adjustable-rate mortgage.
index
The process whereby financial middlemen consolidate many small savings accounts belonging to individual depositors and invest those funds in large, diversified projects.
intermediation
A method for amortizing a mortgage whereby the borrower pays the same amount each month.
level-payment plan
Limits the total amount the interest rate may increase over the life of an adjustable-rate mortgage loan.
lifetime cap
A disclosure form with good-faith estimates of credit costs and transactions terms that must be given to the borrower no later than the third business day after receiving the loan application.
Loan Estimate
The fixed component that is added to the index to calculate the interest rate in an adjustable rate mortgage.
margin
A crime in which the intent is to materially misrepresent or omit information on a mortgage loan application to obtain a loan or to obtain a larger loan than would have not been obtained had the lender or borrower known the truth.
mortgage fraud
Fee paid by FHA borrowers to obtain a loan (up-front and annual).
mortgage insurance premium (MIP)
A business entity that originates, sells, and then services mortgage loans. Mortgage lenders are not depository institutions. They originate loans and then package the loans together and sell the entire package.
mortgage lender
One who finds a lender for a potential borrower, and vice versa.
mortgage loan originator (MLO)
A financing arrangement whereby monthly mortgage payments are less than required to pay both interest and principal. The unpaid amount is added to the loan balance.
negative amortization
A residential mortgage loan that exceed the loan amount acceptable for sale to Fannie Mae.
nonconforming loan
A mortgage loan that is insured or guaranteed by the federal government (FHA or VA).
nonconventional loan
A loan covering both real and personal property.
package mortgage
The buyer makes regular payments smaller than what is required to completely pay off the loan (payments do not fully amortize the loan) resulting in a larger balloon payment to pay off the remaining amount due.
partially amortized mortgage
Limits the amount the monthly payments of an adjustable-rate loan can increase during any adjustment.
payment cap
Limits the amount the interest rate of an adjustable-rate loan may increase at any one time (usually a year).
periodic cap
A source for the purchase of a mortgage loan by a borrower.
primary mortgage market
The party employing the services of a real estate broker; amount of money borrowed in a mortgage loan, excluding interest and other charges.
principal
Needed to insure all of the mortgage representing more than 80% of appraised value or purchase price.
private mortgage insurance (PMI)
Any new mortgage taken as part of the purchase price of real property by the seller.
purchase money mortgage (PMM)
A form of mortgage that enables elderly homeowners to borrow against the equity in their homes so they can receive monthly payments needed to help meet living expenses.
reverse mortgage
A source for the purchase and sale of existing mortgages.
secondary mortgage market
A below-market interest rate usually offered for the first year on some adjustable-rate mortgages.
teaser rate
A measure of a borrower’s total monthly installment debt divided by monthly gross income.
total obligations ration (TOR)
The Truth in Lending Act requires creditors to disclose certain information if certain credit terms, called triggering terms, are included in the advertisement. Triggering terms include the amount or percentage of down payment, number of payments, period (term) of repayment, amount of any payment, and the amount of any finance charges.
triggering terms
A one-time mortgage insurance premium on FHA mortgage loans that is paid at closing.
up-front mortgage insurance premium (UFMIP)
