04 Flashcards
(25 cards)
the process of paying off a debt/mortgage in regular installments based on a fixed payment schedule.
amortization
a payment at the end of a loan period which includes the total outstanding balance of the loan.
balloon payment loan
a mortgage with equal monthly payments that contribute to both principal and interest until the entire loan is paid.
fixed-rate loan
a specific type of adjustable-rate mortgage in which a mortgagor makes lower monthly payments for the first few years of the loan and larger payments for the remainder of the term.
flexible-payment loan
a type of balloon payment loan that calls for periodic payments of interest; aka a straight loan or term loan.
interest-only loan
any loan that is neither insured by the government nor guaranteed by the government.
conventional loan
a loan that is insured by the Federal Housing Administration (FHA), guaranteed by the Veterans Administration (VA), provided by the U.S. Department of Agriculture (USDA), or provided by special programs created by individual states or local jurisdictions.
government-backed loan
the amount of money being loaned compared to the value of the property.
loan-to-value ratio
a loan that does not fit Fannie Mae or Freddie Mac guidelines.
nonconforming loan
a division of the General Land Office of Texas that administers three programs to assist Texas veterans in purchasing a principal residence and/or land and in financing home improvements.
Texas Veterans Land Board (VLB)
a program that gives Texas veterans the opportunity to borrow up to $150,000 to purchases land at competitive interest rates while typically requiring a minimum 5% down payment for tracts of one acre or more.
Veterans Land Loan Program
the interest rate district reserve banks charge Federal Reserve member banks for money borrowed to meet their fund reserve requirements.
discount rate
the rate a bank charges when lending funds to other banks within the Federal Reserve System.
federal funds rate
centralized United States bank created to conduct monetary policy and stabilize the U.S. economy.
Federal Reserve System
the movement of cash into or out of the commercial banks through the buying or selling of government bonds.
open market operations (OMOs)
the short-term interest rate charges to a bank’s largest, most creditworthy customers; strongly influenced by the Fed’s discount rate.
prime rate
a short-term loan used to transition from one loan to another; can connect borrower from construction loan to eventual mortgage loan (or current home to their new home).
bridge loan
a blanket term for a family of loans characterized by low initial payments that increase (or ‘graduate’) at set intervals and by set amounts during the term of the loan.
graduated payment mortgage
the imposition of unfair and abusive loan terms on borrowers.
predatory lending
a mortgage with an interest rate higher than prime mortgages due to the higher risk associated with a less qualified borrower.
subprime mortgage
a loan that enables a borrower to obtain additional financing from a second lender without paying off the first loan; the second lender gives the borrower a new, increased loan at a higher interest rate and assumes payment of the existing loan.
wraparound loan
a fair lending law that aims to bar discriminatory lending practices.
Equal Credit Opportunity Act (ECOA)
the three-day right a borrower has in most consumer credit transactions that are covered by Regulation Zero to rescind the transaction by merely notifying the lender.
three-day right of rescission
state laws that limit interest rates.
usury laws
