week 1

Question 1

capacity

Answer 1

the ability to make mortgage payments on time depending on your assets and amount of monthly income after housing cost, debts and other obligations.

Question 2

capital

Answer 2

An individuals saving, investments or assets. Also known as “cash assets”.

Question 3

Cash-out refinance

Answer 3

Occurs when borrowers refinance a mortgage at a higher principal amount owed on the existing mortgage in order to get additional money. It often serves as an alternative to taking out a equity loan.

Question 4

Gross Income

Answer 4

Money earned before taxes and other deductions. This may include income from self-employment, rental property, alimony, child support, public assistance payments and retirement benefits.

Question 5

Lien

Answer 5

A legal claim of money against a property that uses the value of the property as security in borrowers repayment of debt an requires that full repayment be made when the property is sold.

Examples include mechanics lien(for the unpaid cost of building supplies) or tax lien (for unpaid property taxes).

A lien is a defect on the title and need to be settled before transfer of the ownership. A lien release is a written report of the settlement of a lien and is recorded in the public records as evidence of payment.

Question 6

PITI

Answer 6

Principal, Interest, Taxes and Insurance

Question 7

Refinancing

Answer 7

Paying off one loan by obtaining another loan and is generally done to secure better loan terms, like a lower interest rate.