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Real Estate > Unit 16 > Flashcards

Unit 16 Flashcards

1
Q

3 Components of Financing Market

A
  • Government Influences
  • Primary Mortgage Market
  • Secondary Mortgage Market
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2
Q

The Fed

A

Job is to maintain sound credit conditions
12 reserve districts

When amount of $ available for loans decreases (increases reserves), interest rates go up

When amount of $ available for loans increases (decrease reserves), interest rates go down

Fed can lend to district reserve banks. Discount rate is rate charged when the Fed lends $ to member banks.

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3
Q

Prime Rate

A

The short term rate charged to the banks largest, most creditworthy customers. Strongly influenced by Feds discount rate.

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4
Q

Discount Rate

A

Discount rate increases, bank interest rates increase (fewer loans and less $ in circulation)

Discount rate decreases, bank interest rates decrease (more loans and more $ circulating)

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5
Q

Mortgage Loan Originators (MLO)

A

Anyone who takes a loan by phone or in person.

in IL, must be registered with Nationwide Mortgage Licensing System and do continuing ed

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6
Q

Secondary Market

A

loans are bought and sold after funding; helps when $ is in short supply

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7
Q

Fannie Mae

A

Govt Owned. Secondary market for loans. Conventional, FHA, and VA. The buy pool of mortgages and use them as collateral for mortgage-backed securities sold on global market

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8
Q

Ginnie Mae

A

division of HUD. Pass-thru Certificate is a security interest in a pool of mortgages

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9
Q

Freddie Mac

A

Similar to Fannie Mae

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10
Q

Straight Loan

A

interest only/term loan

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11
Q

Amortized Loan

A

Pays of principle and interest. Also called direct reduction loans. Fully amortized/level-loan payment

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12
Q

FSA

A

Farm Service Agency - Agricultural loans to help purchase and operate farms FARMER MAC

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13
Q

PMM

A

Purchase Money Mortgage. Seller Financing

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14
Q

Package Loan

A

includes real and personal property

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15
Q

Blanket Loans

A

Covers more than one parcel or lot. For subdivision developments. Partial release clause

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16
Q

Wraparound Loans

A

Get second loan, they pay first payments. First loan has to approve. Probs not if alienation or due on sale clause

17
Q

Open End Loans

A

Less costly than home improvement loan

18
Q

Construction Loan

A

payments made as draws during construction

19
Q

Sale-Leaseback

A

for large commercial or industrial properties

20
Q

Buydown

A

lump sum paid to lower interest rates for first few years of loan

21
Q

Reg Z - Truth in Lending

A

Lenders must disclose the true cost of the loan

22
Q

Growing Equity Mortgage (GEM)

A

rapid payoff mortgage

23
Q

Reverse

A

62 or older can borrow on the equity of their home. FHA has Home Equity Conversion Mortgage

24
Q

NonRecourse

A

borrower not personally liable. Most common in commercial and investment

25
Q

LTV

A

Loan to Value Ratio. Ratio of debt to value of the property. Value is sales price or appraised value, whichever is less

26
Q

Conventional Loan

A

usually 80% because borrower makes 20% down payment. Govt not involved

27
Q

Credit Scores

A

important for loan, other than FHA and a few other nonconforming.

Lower score, increased rate and down payment
Higher score, lower rate and possible smaller down payment

Lenders look at 2 years of repayment history

28
Q

Fed Programs handling of Judgements, Foreclosures and Bankruptcies

A

Judgements paid and more than 2 years past

Bankruptcies usually 4 years to reestablish credit

Foreclosures usually 3 years prior with circumstances to justify

29
Q

PMI

A

Private Mortgage Insurance

Usually terminates at 22% equity and current on payments

30
Q

FHA Loans

A

loans insured by agency

higher LTV loans

3.5 down payment
Monthly insurance premium
fha appraisal
maximum limits
credit qualifications

Can be assumed by qualified buyer

31
Q

VA Loans

A

VA guarantees loans for eligible veterans and their spouses
Little or no down payment
are assumable

Real Estate (23 decks)

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