lesson 5: the financing environment Flashcards
the law of agency
The legal environment in real estate transactions
whoa re the two parties in the law of agency?
principal and agent
when does the financing environment exist?
when a buyer does not have sufficient cash to purchase the property in question
he resorts to his bank to obtain a mortgage to cover the portion that is missing
whats a mortgage?
term used for a loan on a real estate transaction
what is a name Loan-To-Value ratio?
a mortgage
The loan expressed as a percentage
the mortgage value that the bank is willing to give you
mortgage payments
Usually refer to monthly installments made to your bank in order to reduce your outstanding loan and eventually pay it off entirely
Mortgage Payment = Interest portion + Principle portion
how do you calculate principle portion on a mortgage payment?
Principle portion = Mortgage Payment – Interest portion
Mortgage Loan Balance
The portion of the loan that is still outstanding at any point in time
Mortgage Loan Balance = Mortgage Loan – Principle portion
Outstanding Loan Balance
Refers to mortgage loan balance