Chapter 9 Flashcards
Promissory Note
Following a loan commitment from the lender, the
borrower signs a note, promising to repay the loan under stipulated terms.
The promissory note establishes personal liability for its payment. The
evidence of the debt.
Face Value
That amount borrowed that is displayed on the promissory
note.
Secured Debt
Debt that is backed or secured by collateral to reduce the
risk associated with lending.
Unsecured Debt
An obligation or debt that does not have specific
property serving as collateral for payment of the debt.
Interest Rate
The percentage of a sum of money charged for its use. Rent
or charge paid for use of money, expressed as a percentage per month or
year of the sum borrowed.
Annual Percentage Rate
The relative cost of credit as determined in
accordance with Regulation Z of the Board of Governors of the Federal
Reserve System for implementing the Federal Truth in Lending Act.
Mortgage Broker
A broker who arranges a mortgage loan between a
lender and a borrower for a fee.
Mortgage Banker
A person whose principle business is the originating,
financing, closing, selling and servicing of loans secured by real property for
institutional lenders on a contractual basis.
Fixed Interest Mortgage
A mortgage in which the interest does not
change.
Variable Interest Rate
An interest rate in a real estate loan which by the
terms of the note varies upward and downward over the term of the loan
depending on money market conditions.
Intercontinental Exchange London Interbank Offered Rate (LIBOR)
A
benchmark rate that some of the world’s leading banks charge each other
for short-term loans.
Prepayment Penalty
A penalty for paying off a loan before its maturity
date.
Maturity Date
The date by which a loan is to be paid in full.
Acceleration Clause
A condition in a real estate financing instrument
giving the lender the power to declare all sums owing lender immediately
due and payable upon the happening of an event, such as sale of the
property, or a delinquency in the repayment of the note.
Due on Sale Clause
An acceleration clause granting the lender the right to
demand full payment of the mortgage upon a sale of the property.
Economic Index
A piece of statistical data that is used to assess the health
or condition of the overall economy.
Equity
The value of an asset minus the debt.
Bond
A debt instrument that represents debt
Stock
Represents ownership interest in a corporation.
Debt Instrument
A paper or electronic obligation.
Negotiable Instrument
An unconditional promise or order, to pay a fixed
amount of money, with or without interest, or other charges described in
the promise or order.
Yield
A return on an investment.
Return of Investment
Return or recapture of the original investment
amount.
Return on Investment
Any additional amount after the return of
investment.
