Vocab for MLO Test (All of "A") Flashcards
1003 Form
It’s Fannie Mae’s form number for the Uniform Residential Loan Application (URLA). Freddie Mac refers to this as Form 65. The URLA, 1003, and Form 65 are all the same forms and serve as a mortgage loan application.
1031 Exchange
A 1031 exchange is a real estate investing tool that allows investors to swap out an investment property for another and defer capital gains or losses or capital gains tax that you otherwise would have to pay at the time of sale.
2-1 Buydown
It’s a type of financing that lowers the interest rate on a mortgage for the first two years before it rises to the regular, permanent rate.
4506-C
It’s a type of financing that lowers the interest rate on a mortgage for the first two years before it rises to the regular, permanent rate.
Abstract of Title
A summary giving details of the title deeds and documents that prove an owner’s right to dispose of land, together with any encumbrances that relate to the property.(Includes conveyances, interests, and liens)
Acceleration Clause
A loan agreement that requires the borrower to pay off the loan immediately under certain conditions
Accrued Interest
A loan agreement that requires the borrower to pay off the loan immediately under certain conditions
Acquisition Costs
The original cost of an asset
Adjustable Rate Mortgage (ARM)
A mortgage that does not have a fixed interest rate.
Adjusted Basis
A mortgage that does not have a fixed interest rate.(Capital gain or loss for income tax purposes when the property is sold)
Adjustment Interval
The time between the interest rate change and the monthly payment for an ARM. The interval is usually every one, three or five years depending on the index.
Adjustment Period
The time between the interest rate on an adjustable-rate mortgage (ARM) can reset
Affiliated Business Arrangement (AfBA)
When a person in a position to refer real estate settlement services has an affiliate relationship with, or a direct beneficial ownership interest in. (an entity to which settlement business is referred such as a joint venture title or mortgage entity.)
Agreement of Sale
A legal document that outlines the terms of a real estate transaction (Obligates someone to sell)
Alienation Clause
A contract signed with the lender that states that the borrow must pay the mortgage in full before the borrower can transfer the property to someone else.( Also known as a Due-On-Sale-Clause)
Alternative Documentation
Documents that serve as proof of income for loans. (Could be pay stubs, W-2 forms, tax returns and bank stubs)
American land title association (ALTA)
Improves the skills and knowledge of providers in the real property transaction (It’s a trade association for insurance industry) (Founded in 1907)
Amortization
A period in which a debt is reduced or paid off by regular payments.
Amortization Term
The length of time it will take to amortize the mortgage loan expressed in months. (EX: 30 year mortgage is 360 months)
Annual Percentage Rate (APR)
The actual cost of borrowing money expressed in the form of an annualized interest rate (It’s told as a percentage)
Annuity
A fixed sum of money paid to someone each year, typically for the rest of their life or specific duration. (It’s like a will)
Appraisal
An expert estimate of the value of something.
Appraisal Fee
A fee charged by a licensed appraiser to estimate a homes market value.
Appraiser
A person who estimates the value of something such as real estate.
Appreciation
An increase in an assets value. (Often because of inflation)
Arbitration
A process in which a dispute is submitted, by agreement of the parties, to one or more arbitrators tomato a final binding decision to resolve the dispute.
Adjustable Rate Mortgage Disclosure
Helps show the borrower the info on the loan payment if the rate increases. (Your payment in a ARM can change in the future)
Adjustable Rate Mortgage Handbook (CHARM)
This must be presented within 3 days of an application.
Asbestos
A soft gray mineral used to build material in the past. (Can be found in older homes, can cause lung disease)
Assessed Value
A property’s determined valuation to calculate the appropriate tax rates.
Assessment
Determination of the rate or amount of something, such as a tax or damage.
Assessor
An official who evaluates or makes assessments (usually for taxation purposes)
Asset
An owned item that has value (Property owned by someone)
Assignment
The transfer of rights or property.
Assignment of Mortgage/Assigned Loan
When a mortgage lender or borrower transfers the mortgage to a third party.
Assumption (Of Mortgage or Trust Deed)/Assumable
Allows someone to find a house they want to buy and take over the seller’s existing home loan without applying for a new mortgage. (This means the remaining balance, mortgage rate, repayment period and other loan terms stay the same, but the responsibility for the debt is transferred to the buyer.)
Assumption Fee
A fee paid to a lender when an assumption takes place. (someone else bought the property off the previous owner, to avoid a new mortgage.)
Average Prime Offer Rate (APOR)
An annual percentage rate that is based on average interest rates, fees, and other terms on mortgages offered to highly qualified borrowers.
