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Illinois Real Estate > Unit 16 - Real Estate Financing: Practice > Flashcards

Unit 16 - Real Estate Financing: Practice Flashcards

1
Q

The real estate financing market has these basic components

A

Government Influences
Primary Mortgage market
Secondary mortgage market

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2
Q

The federal reserve

A

Maintains sound credit conditions
Helps inflation and deflation
Creates a favorable economy

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3
Q

The fed requires

A

That each member bank keep a certain level of assets on hand

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4
Q

Define Primary Rate

A

The short term interest rate charged to a banks largest, most credit worthy customers

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5
Q

Define a Primary Mortgage Market

A

Made up of the lenders that originate mortgage loans

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6
Q

Income on a loan is realized from

A

Finance charges

Recurring income

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7
Q

Servicing loans involves

A

Collecting payments
Accounting
Bookkeeping
Processing payments

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8
Q

Some of the major lenders in the primary market include

A 
Thrifts
Savings associations
Commercial banks
Insurance companies
Credit unions
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9
Q

Define the Federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008

A

Requires that each individual state must license and register mortgage loan originators (MLO’s)

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10
Q

Define the Secondary Mortgage Market

A

Where various agencies purchase existing mortgage from banks and savings associations

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11
Q

Define Fanie Mae

A

A government sponsored enterprise that provides a secondary for morgage loans

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12
Q

Define Ginnie Mae

A

Administers special assistant programs and guarantees mortgage backed securities using FHA & VA collateral

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13
Q

Define Freddie Mac

A

A government sponsored enterprise that provides secondary market primarily for conventional loans

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14
Q

Define a Straight Loan

A

A nonamortized loan that essentially divides that loan into two amounts to be paid off separately

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15
Q

Define Amortized Loan

A

A loan in which the payment partially pays off both principle and interest

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16
Q

Define a Fully Amlrtized Loan

A

A loan in which the mortgagor pays a constant amount usually monthly

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17
Q

Define an Adjustable Rate Mortgage

A

A mortgage that generally originate at one rate of interest then fluctuate up or down during the loan term

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18
Q

What are the common components of an adjustable rate mortgage

A 
An index
Rate caps
Payment cap
Adjustment period 
Conversion option
19
Q

Define a Balloon Payment

A

When the final payment in a loan is larger than the others

20
Q

Define a Growing Equity Mortgage

A

A mortgage that uses a fixed interest rate, but payments of principle are increased according to an index

21
Q

Define a Reverse Mortgage

A

A mortgage that allows people age 62 or older to borrow money against equity they’ve built in their home

22
Q

Define a Non Recourse Loan

A

A loan is one in which the borrow is not held personally responsible for the loan

23
Q

Mortgage loans are classified based on their

A

Loan to value ratio

24
Q

Define a Loan To Value Ratio (LVT)

A

The ratio of debt to value of the property

25
Q

Define a Conventional Loan

A

A loan in which the LTV ratios are the lowest

26
Q

The key element in qualifying for a conventional loan is the borrowers

A

Creditworthiness

27
Q

One way a borrower can obtain a mortgage loan with a lower down payment is by obtaining

A

Private Mortgage Insurance (PMI)

28
Q

Define Private Mortgage Insurance

A

An insurance policy that provides the lender funds in the event the borrow defaults on the loan

29
Q

Define an FHA loan

A

Refers to a loan that is insured by the Federal Housing Administration

30
Q

FHA loans charge the borrow

A

Mortgage Insurance Premiums (MIP)

31
Q

Define a VA Loan

A

A loan guaranteed by the Department of Veteran Affairs

32
Q

For the property being purchased, the VA issues a

A

Certificate of Reasonable Value (CRV)

33
Q

Define Purchase Money Mortgage

A

A note and mortgage created at the time of purchase when the seller agrees to finance or part of the purchase price

34
Q

Define Package Loans

A

A loan that includes real and personal property

35
Q

Define Blanket Loans

A

A loan that covers more that one parcel or lot, usually used to finance subdivisions

36
Q

Define Wraparound Loans

A

A loan thag enables a borrower with an existing mortgage to obtain financing from an additional lender

37
Q

Define an Open End Loan

A

A loan that secures a note executed by the borrower to the lender

38
Q

Define a Construction Loan

A

A loan made to finance the construction of improvements on real estate

39
Q

Define a Sale-Leaseback Arrangement

A

An arrangement used to finance large commercial properties

40
Q

Define a buy down

A

A way to temporarily lower the initial interest rate on a mortgage

41
Q

Define a Home Equity Loan

A

A loan that provides a source of funds using the equity built up in a home

42
Q

Define the Truth in Lending Act

A

Also referred as Regularion Z, requires that credit institutions inform borrows of all finance charges and interest rate before the loan is completed

43
Q

Define the Equal Credit Opportunity Act

A

An act that prohibits lenders from discriminating against applicants based on color, race, religion, sex and national origin

44
Q

Define the Real Estate Procedures Act (RESPA)

A

An act that applies to any residential real estate transaction involving a new first mortgage loan

Illinois Real Estate (24 decks)

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