Unit 7: Miscellaneous Mortgage Terms Flashcards
1
Q
What is loan-to-value ratio?
A
The relationship between the loan amount and either the sales price or the appraised value of the property.
2
Q
What is another name for loan-to-value ratio?
A
Mortgage ratio
3
Q
T/F The lower your LTV, the less risky your loan application looks to lenders.
A
True
4
Q
What is equity?
A
Market value today - total debt today = equity
5
Q
What is leverage?
A
Using borrowed money to finance an investment.
6
Q
T/F The higher the LTV, the lower the leverage.
A
False. The higher the LTV, the HIGHER the leverage.
7
Q
What is discount points?
A
Fees paid directly to the lender at the closing in exchange for a reduced interest rate.
8
Q
What does 1 discount point equal?
A
1% of the loan amount.
9
Q
What is usury?
A
Charging an interest in excess of what is permitted by law.
